Russia is about to default on a $100 million interest payment, making it the first time in almost 25 years that it has done so. The sanctions imposed on Russia since it's unprovoked attack on Ukraine have made it impossible to pay the creditors:
"The $100m interest payment was due on 27 May. Russia says the money was sent to Euroclear, a bank which would then distribute the payment to investors.
But that payment has been stuck there, according to Bloomberg News, and creditors have not received it.
'They have not got it,' says Jay Auslander, a US lawyer who has worked on many government debt cases. 'And the overwhelming probability is they're not going to get it.' If this money has not arrived within 30 days of the due date, that is, Sunday evening, that will widely be considered a default.
Euroclear wouldn't say if the payment had been blocked, but said it adheres to all sanctions." (our emphasis)
Although Russia can pay the amount, the situation is a blow to Putin's prestige, and drives home the point that his regime has been isolated from the financial markets of the West because of his war on Ukraine and the crimes his forces have committed there.
In another development, the U.S., UK, Canada and Japan have announced that they will no longer import Russian gold, which accounts for roughly $15 billion in income a year for Russia. In their G7 meeting, the allies vowed to keep up the pressure on Russia:
"US President Biden suggested the other G7 nations - Germany, France and Italy - would also join the ban.
'Together, the G7 will announce that we will ban the import of Russian gold, a major export that rakes in tens of billions of dollars for Russia,' he said in a tweet.
UK Prime Minister Boris Johnson added: 'We need to starve the Putin regime of its funding. The UK and our allies are doing just that.'"
The only question we'd pose is why this wasn't among the first tranche of sanctions after Putin launched the war in February. Better late than never.
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