US Treasury Set to Force Russian Default in Coming Days

The Biden administration, along with a number of key economic allies of the United States, opted for a slow-roll strategy when it came to sanctioning Russia for their unjustified invasion of Ukraine.  This has the stranglehold approach, as opposed to the Karate chop approach, and it was likely designed for the purpose of keeping Vladimir Putin from doing something drastic and reactionary.

Now, as the world’s economic grip on the neck of the Russian economy continues to tighten, the US is set to apply the final, fatal pressure in the coming days.

The U.S. has announced that it will not extend an exemption permitting Moscow to pay foreign debt to American investors in U.S. dollars, potentially forcing Russia into default.

Up until Wednesday, the U.S. Treasury Department had granted a key exemption to sanctions on Russia’s central bank that allowed it to process payments to bondholders in dollars through U.S. and international banks, on a case-by-case basis.

This had enabled Russia to meet its previous debt payment deadlines, though forced it to tap into its accumulated foreign currency reserves in order to make payments.

On Wednesday, that order will expire, sending Russia’s fiscal gurus into a panic.

The Kremlin, however, will likely exude a calm, poised reaction, using the optics of nonchalance to declare the default “invalid”.

Ordinary Russians are already suffering mightily under the weight of these international sanctions, and a default could mean more trouble still.


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