Russia Hasn't Done This in a Century

Country inches toward a possible default on foreign debt for first time since 1918
By Arden Dier,  Newser Staff
Posted Mar 16, 2022 2:07 PM CDT
Russia May Default on Foreign Debt
Russian President Vladimir Putin, right, speaks to Finance Minister Anton Siluanov at the Eurasian Economic Council in St. Petersburg, Russia, on Dec. 6, 2018.   (Olga Maltseva, Pool Photo via AP)

"The last time Russia defaulted on foreign debt, Lenin was in power," reads a headline from Quartz. It's a relevant historical fact as Russia, under heavy sanctions triggered by its invasion of Ukraine, inches toward a default on its foreign debt again, more than a century after it last did so under the lead of that other Vladimir. Russia faces a Wednesday deadline to pay $117 million in interest payments to investors holding two bonds denominated in dollars, the Guardian reports. The problems: much of its foreign currency reserves have been frozen, and it's unclear whether sanctions would snag a payment as it was processed.

Russian Finance Minister Anton Siluanov said Monday that any issue with payment in dollars would result in "a relevant transfer order in the ruble equivalent." However, the debt does not carry a provision allowing for alternative currency payments, per the Guardian. "Is that a default? From Russia’s point of view, we are fulfilling our obligations," added Siluanov, who previously accused Western countries of trying to orchestrate an "artificial default." He said Wednesday that the payment had been issued in dollars but did not have confirmation of whether it went through.

"We paid the payment, now the ball is on the side, first of all, of the American authorities," Siluanov said, per the Wall Street Journal. A day earlier, rating agency Fitch said a payment in rubles would put Russia in default following a 30-day grace period that ends April 15. "A default on local-government debt could come even sooner," per the Journal. As for the default in 1918, following the Bolshevik Revolution: "The debts were never repaid," Quartz reports. "Instead, as might well happen with modern Russia’s foreign debt, they were subsumed by the sweep of geopolitics and war." (More Russia stories.)

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