The Putin government decided last Friday, April 29, that they would go ahead and make an overdue $650 million payment on foreign-held bonds out of the foreign currency reserves still under their control – and not “frozen” (i.e., stolen) by the U.S. Treasury Department as part of their Wild West sanctions against Russia. Until now, the Russian government had offered to pay the $650 million on notes coming due either out of the frozen assets, or in rubles – which was flatly rejected by the creditors and the U.S. Treasury.
Russia made the payment in time to meet the deadline of May 4 to finalize the payment on April 4 due dates, in order to avoid being declared in official default. It is not clear at this time if the decision was made as a concession to international pressure, or as a tactical move because Russia has bigger fish to fry at this time. For example, there is growing tension and angst across Europe over Russia’s demand that they be paid in rubles for gas. Politico commented: “EU companies are scrambling to understand how to keep paying for Russian gas without falling foul of EU sanctions or getting their gas supply cut off by Moscow.… Moscow sent a signal it’s not bluffing last week when it stopped supplying Poland and Bulgaria, after both countries refused to comply with Russia’s request. Further gas payments are coming due in the second half of May, raising the prospect of more shut-offs unless a solution is found.”
