Russia defaulted on its debt for the first time in more than a century. Worth more than $100 million

Photograph: Maxim Shemetov/ReutersThe Kremlin and Saint Basil’s Cathedral in Moscow

For the first time in more than a century, . was released Russia On Monday, the White House said it had defaulted on its foreign sovereign bonds. This achievement is linked to the comprehensive sanctions that have excluded the country from the global financial system and made its assets untouchable. According to a statement from a US official, this Russian failure puts “the strength of actions taken by the Americans, along with allies and partners, as well as an impact on the Russian economy.” Because of the sanctions ordered in response to her attack in UkraineAbout to complete five months, Russia can no longer make transfers in Western currencies to pay interest on its foreign debt earned in dollars or euros.

The payments in question are $100 million in interest on two bonds, one in dollars and the other in euros, that Russia was due to pay on May 27. The payments had a 30-day grace period, which expired on Sunday. last time country Russian President Vladimir Putin The default was in 1918, during the Bolshevik Revolution, when Lenin decided not to pay the debts of the tsarist regime. However, in 1998, almost two years before Putin reached KremlinRussia, hampered by the effects of the collapse of the Soviet Union, the crisis in Asian economies and falling commodity prices, found itself in default on its national debts and had to impose a freeze on its foreign debt.

Russian currency: the ruble │REUTERS / Maxim Shemetov / disambiguation

The official default could be largely symbolic, as Russia can’t borrow internationally at the moment and doesn’t need to do so thanks to abundant oil and gas export revenues. But stigma is likely to increase borrowing costs in the future. The Kremlin rejects this information, but acknowledged that due to international sanctions, two payments did not reach its creditors by Sunday’s deadline. The Ministry of Finance insisted in a statement that “the failure of investors to receive the funds is not the result of non-payment.” He added, “However, this is caused by the act of a third party, which is not directly considered negligence.”

“The allegations about stopping Russian payments are absolutely illegal,” Kremlin spokesman Dmitry Peskov told the press. The Russian Finance Ministry said it made payments to the National Settlement Depot in euros and dollars, adding that it complied with its obligations. In a call with reporters, Kremlin spokesman Dmitry Peskov said that Russia made the bond payments due in May, but the fact that Euroclear blocked it due to Western sanctions against Russia “is not a problem”.

Russia has struggled to meet $40 billion in bond payments since its invasion of the eastern European country. “Since March, we’ve been thinking that a Russian default will likely be inevitable, and the question was when,” Denis Hranitsky, head of sovereign litigation at law firm Coen Emmanuel, said before Sunday’s deadline. Russia’s efforts to avoid what would be its first major default in international bonds since the Bolshevik Revolution more than a century ago hit a snag in late May when the US Treasury’s Office of Foreign Assets Control effectively prevented Moscow from making the payments.