there Russia is in Originally on his debts in foreign currency for the first time since 1918. Moscow’s grace period expired after midnight 100 million dollars of bonds not yet paid and blocked by Western Bloc sanctions. From Germany, the heads of state and government of the G7 sent a message of unity to the address of Wladimir Putin: “We are united and will support Ukraine as long as necessary”. On the battlefield, the Kremlin troops have meanwhile returned to bombing Odesa.
What the Moscow default means
Let’s start with the most important news of the last few hours. Russia’s standard, at least so far, actually has one symbolic value more than practice or politics. Economically, financially and politically, Moscow is already being marginalized by most of the West. As if that wasn’t enough, the failure wasn’t so much due to the lack of money on the part of the debtor – in our case Russia – regarding the closure of the transmission channels until creditor.
The Kremlin had come close to finding itself in this situation earlier this year, but managed to cope by changing payment methods. there turning point it happened last May when the US Treasury failed to renew the license that allowed US investors to be exempt from sanctions. From that moment on, it became almost impossible for the Russians to pay off the debt in dollars or in the currencies specified in the issuance plans.
“Anyone can say whatever they want and try to put whatever label they like on Russia. But anyone who understands the situation knows that this is by no means a default,” the Russian finance minister thundered. Anton Siluanov. The point, as said, is that this standard currently has a strong symbolic meaning and little else. Earlier, when Moscow was getting close to the same situation it is in now, the Russian government tried to introduce a new financial mechanism to pay in rubles to prove that it was able to fulfill its obligations. In other words, Russia’s default is not because the country does not have the money to repay the roughly $100 million in debt, but because it is effectively blocked sanctions. Furthermore, the same money should have ended up in the pockets of investors (mostly western) who bought this Russian Debt in foreign currency.
A unique scenario
It is true that this would be the second non-repayment of foreign debt for Russia after Russia 1918 (On that occasion, the Soviet government refused to repay the sums accumulated by the tsars), but today we are in one unique scenario. Also because that’s usually how it is rating agencies to issue the bankruptcy judgment of a sovereign state. However, the sanctions prohibit them from doing business in and with Russia. And the questions keep piling up.
Meanwhile from Germany the leaders of the G7 They have united and shown their willingness to support Ukraine for as long as necessary. Their position is summarized in a tweet from the President of the European Council Karl Michael: “Today in Elmau we are united with our G7 partners in our resolute support for Ukraine. We are thinking of the Ukrainian people while Russia launches rocket attacks on civilians in Kyiv.”
However, from a military point of view, we have to report a Russian missile attack in the southwestern Ukrainian region in the last few hours Odesa. The first report speaks of at least 6 injured. In the Donbass, fighting continues on the southern outskirts of the city Lysychansk and have consolidated control over Severodonetsk and surrounding settlements.