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MOSCOW / BEIJING, Dec. 12 (Reuters) – The Beijing-backed Asian Infrastructure Investment Bank (AIIB) has approved a $ 500 million loan to Russia to help finance road construction, its first after years of high-level talks and as Moscow strengthens ties with China.

Moscow has been pushing for stronger relations with Asia since the imposition of Western sanctions in 2014 on Russia’s role in the Ukraine crisis which has limited its access to Western financial markets. Russia is now one of China’s top three energy suppliers.

President Vladimir Putin has made the development of Russia’s Far East region, which has land borders with China and North Korea and shares maritime borders with Japan, a priority, in the hope of attract investment in sectors ranging from agriculture to energy.

The first $ 96.7 million tranche of the AIIB loan will be used to repair a highway connecting St. Petersburg in northwest Russia to Norway, Russia’s Economy Ministry said in a press release, other sections also being reserved for road infrastructure.

While the AIIB is leading the first sub-project, which covers around 14 kilometers of road, Russia will prepare the second and third on its own, Stefen Shin, project investment manager at AIIB, told Reuters.

He said the second and third sub-projects will be closer to the borders of Finland and China, respectively, covering around 70-100 km of road in total. The loan is one of the largest ever approved by the AIIB, Shin said.

The AIIB started its activities in January 2016 and now has 100 accredited members around the world. Russia is the third AIIB shareholder after China and India, with Britain, Germany and Italy among the other members with smaller stakes.

Maxim Oreshkin, Russian Minister of Economy, said in a statement that he believed the loan “shows that the policy of restricting sanctions cannot last forever.”

Russia needs $ 60 billion a year over the next five years for infrastructure, according to Global Infrastructure Hub, an independent infrastructure organization backed by the G20.

The AIIB said in July that it aims to fund around $ 4 billion in projects in 2019, and $ 10 to 12 billion annually in the years to come. (Reporting by Dasha Korsunskaya in Moscow and Gabriel Crossley in Beijing; Additional reporting by Ryan Woo in Beijing; Writing by Maria Kiselyova / Alexander Marrow; editing by Jason Neely / Katya Golubkova / Susan Fenton)

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