US move to block debt payments will not affect Russia’s reputation – Medvedev
The potential move by Washington to stop Russia’s debt payments to US investors will not impact the country’s financial reputation, the deputy chairman of Russia’s Security Council and former president, Dmitry Medvedev, wrote on his Telegram channel on Thursday.
“The Americans are still thinking of preventing Russia from paying off our debt obligations in dollars. Not the worst decision for us. Everyone understands that this is a political default, not a financial one,” Medvedev stated.
“Russia is capable of repaying any of its obligations in any currency, as long as no artificial problems are created. Therefore, [the US ban] will not affect the real financial reputation of our country in any way.”
According to Medvedev, if Washington indeed denies Russia the ability to pay its debt coupons, “such actions by the United States, which create technical obstacles to the fulfillment of obligations, should be considered by the court either as force majeure or as the fault of the creditor.”
Medvedev noted that this would also mean that the US government is single-handedly denying American bond holders their money.
“It’s a strong move for [US President Joe] Biden, one that builds confidence in his financial system amid inflation and the energy crisis,” Medvedev quipped.
He said Russia could fulfill its obligations by paying in rubles, but noted that there are always other ways.
“We may not pay at all. And use the unspent money for precisely those purposes that those senile Americans will not like very much. As they say, he who laughs last, laughs best.”
The US slapped Russia with severe economic restrictions in response to the country’s military operation in Ukraine. However, it also issued a waiver that allowed Russia’s sovereign debt to be serviced under the sanctions. On Wednesday, US Treasury Secretary Janet Yellen said that Washington would most likely not renew this exemption after it expires on May 25. She noted, however, that the final decision has not yet been made, as the authorities are evaluating the potential consequences for US investors.
Russia is due to pay up on two debt coupons on May 27. Some analysts warn that failure to pay would constitute a technical default, but experts say that given the circumstances, this would hardly impact either Russia’s economy or its reputation.
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