The Eurasian Economic Commission Calls for Its Own Credit Rating Agency


In today’s brief post, the concept of a country or a region developing its own credit rating agency again raises its head, this time in relation to the Eurasian Economic Commission and the countries that it relates to. We have seen on multiple occasions the calls for regionalised credit rating agencies to be developed, often to no avail.

 

The Eurasian Economic Commission, created by Treaty between Belarus, Russia, and Kazakhstan in 2014, exists very much in the same process as the European Union, complete with its own court system (located in Minsk) and a range of policy objectives across the Member States. However, the reading of the latest announcement from the Minister for Integration and Macroeconomics – Sergei Glazyev – reveals the centrality of Russia and its interests. He states that ‘I believe that the creation of a rating agency in the EAEU is a very important issue. As long as we use the ratings of America’s Big Three credit rating agencies, we will automatically face barriers in the financial market. In fact, you know that the Americans are waging a war of sanctions against Russia and that American rating agencies report to the U.S. Department of the Treasury. They follow all its instructions…’ Whilst this claimed link between the Agencies and the US Treasury is not evidenced in any way, the perceived treatment by the agencies of a number of countries that are not aligned with the US has been a constant seed-bed for calls for new, more sympathetic agencies to be created. This is not an old concept (I wrote about Russia’s attempt to do this via the commercial agency marketplace in 2017), and others have bene suggested since. However, the Chinese experience perhaps details the reality of the situation best. Simply put, if one wants access to the international capital marketplace, then the international rating agencies are the gatekeepers. It really is that simple. A pension fund in the UK, for example, would simply not consider the rating of a regionally-backed rating agency regarding the region that created it. It is just not feasible. If the aim is simply to provide an alternative viewpoint, then that could be achieved by the imagined rating agency, but that is perhaps the most that could be achieved – the international capital markets would still not consider it. For better or worse, the international credit rating agencies have the veneer of independence, and it is that veneer that simultaneously makes them some of the most profitable companies on the planet, and also stifles any sort of competition. The equation of perceived independence combined with an oligopolistic – i.e. streamlined and uncomplicated – output is alive and well, and the wishes of the Eurasian Economic Commission will not affect that.

 

Keywords – credit rating agencies, Eurasian Economic Commission, Russia, Business, @finregmatters

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