Moscow officially entered bankruptcy last week when it defaulted on debt repayments to foreign creditors for the first time in more than a century. This in itself would probably not be enough for a separate chapter in national economic policy scripts, history knows many state failures. After all, one is also currently taking place in Sri Lanka.
The Russian case is unique in that the state was essentially forced into bankruptcy by the creditors themselves, or rather by the governments of the countries from which they originate. Unlike other bankrupt countries in history, Russia actually had the money to honor its obligations. However, due to the fact that the West froze them as part of the sanctions, it cannot dispose of them, so the money did not go to the accounts of the owners of Russian bonds.
Of course, Moscow denies its insolvency and claims that the unrealized transfer of money is not its problem. The real culprit is the West, which arbitrarily blocks Russian billions of dollars. In addition, there is also an official “stamp” from the rating agencies, which usually evaluate state bankruptcies by lowering the rating. Because of the war, not a single one follows Russia.
However, Russia’s reputation among investors is irreversibly damaged and will be reflected in higher interest rates on future loans. The bizarreness of the whole story is underlined by the fact that Moscow doesn’t even need to borrow at the moment. A sufficient supply of money is ensured by payments for energy raw materials, including from the countries that pushed Russia to bankruptcy.
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