Opinion: Russia gets caught in a messy financial web woven by the West | Stephen Bartholomeusz
Russia’s “default” on its foreign currency sovereign debt last weekend is one of the stranger outworkings of the web of sanctions the West has woven around Russia’s finances., and technically is one, the ratings agencies that would normally declare the default have yet to do so.They can’t, because the sanctions prevent them from rating Russian bonds.
Then the European Union sanctioned Russia’s National Settlement Depositary, completing the wall around Russia’s ability to transfer funds out of the country.The bizarre aspect of the situation is that Russia has the funds to meet the payments and avoid default –– and is willing to pay them out. Indeed, the government transferred the funds to an agent within Russia. The problem is that the agent is unable to deposit those funds in the bondholders’ accounts because of the sanctions.
The US and Europe presumably wanted to attach the odious label of defaulters to the Russians, as well as signalling that the net of financial sanctions had been completed and that Russia is now largely, albeit not entirely given its relationships with China and India and a handful of others, cut off from the core of the global financial system.
They could also try to convince a court to allow them to seize assets, including the central bank reserves that have been frozen in offshore jurisdictions, or Russian government properties offshore. Sovereign and diplomatic immunities would complicate those efforts.
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