Private banks are also key players in debt-repayment negotiations such as debt for equity swaps with developing and other debtor countries. Up to 70–75 per cent of Russia's foreign debt of US$140 billion in 1999, for example, is owed to about 600 private western banks (London Club). 43 This amount is mainly owed by the central government, which had to take over earlier debts of the Soviet Union (about US$65 billion) and now has to increasingly support privatized companies with financial problems. Internationally, third-world debt amounted to about US$1.6 trillion in 1997, most of which was owed to western and Japanese credit institutions, the IMF and other international donors.
General commercial banks and specialized securities and investment houses are increasingly taking part in recipient countries' economic development by investing in local stock exchanges and providing direct loans to domestic enterprises with good credit ratings. Despite persistent fears that foreign financial institutions (FFI) take money out in difficult times, they have also become major investors. India's policies, for example, are aimed at attracting foreign capital through both FFI and FDI routes. In 1997, capital flows generated by FFI in India amounted to US$12 billion, about six times the volume generated by FDI. In Russia, too, portfolio investments are about 2–2.5 times higher than FDI inflows. 44