Russia will take legal action if the West tries to force it to go bankrupt over its public debt, Finance Minister Anton Siluanov told the pro-Kremlin newspaper Izvestia on Monday, sharpening Moscow’s tone in its economic battle with the West. Russia is facing its first external bankruptcy in more than a century after settling its international ruble bond last week, even though the payment was in US dollars. On April 4, $ 649 million was due to be paid to the holders of two of its government bonds, but the US Treasury Department blocked the transfer, preventing Russia from using any of its frozen foreign exchange reserves to service its debt. “Of course we will sue, because we have taken all the necessary measures to ensure that investors receive their payments,” Siluanov told the newspaper in an interview. “We will present to the court our bills that confirm our efforts to pay both in foreign currency and in rubles. It will not be an easy process. “We have to prove our case very actively, despite all the difficulties.” Siluanov did not elaborate on Russia’s legal options and did not say where any court hearings could take place. The bonds were issued under English law, which allows a borrower to defend himself by saying that an outside force made it impossible to meet the obligations, so the court may defer payment, said Mitu Gulati, a law professor. at the University of Virginia. . “So I think Russia will support that, but… this ένας is a war… caused by Russia,” said Gulati, also a debt restructuring expert, adding: “This is not a completely unlikely legal argument.” Siluanov said Russia would do everything possible to ensure that its creditors were paid. “Russia has tried in good faith to repay its foreign creditors,” Siluanov was quoted as saying. “Nevertheless, the deliberate policy of the western countries is to artificially create a man-made bankruptcy by any means.” Siluanov said Russia’s foreign debt was about 20 percent of its total public debt, which stood at about 21 trillion rubles ($ 262 billion). Of these, about 4.5-4.7 trillion rubles were external liabilities. The finance ministry did not respond to a request for comment by Reuters. Russia has not defaulted on its foreign debt in the wake of its 1917 revolution, but its bonds have become a hotbed of economic turmoil in the West. The key question is whether Russian assets previously frozen by Western countries, such as nearly half of Russia’s $ 640 billion in gold and foreign exchange reserves, could be claimed by creditors after the bankruptcy, said Artur Starikov, an associate. Capital Law Office. A bankruptcy was unthinkable until recently, with Russia being hailed as an investment grade in the wake of its February 24 invasion of Ukraine, which Moscow calls a “special military operation.” “If an economic and financial war is waged against our country, we are forced to react, while at the same time fulfilling all our obligations,” Siluanov said. “If we are not allowed to do it in foreign currency, we do it in rubles.” Be smart with your money. Receive the latest investment information delivered directly to your inbox three times a week with the Globe Investor newsletter. Register today.
