For the first time in over 100 years, Russia appears to be in a particularly worrisome financial spot.
On account of their unjust and inhumane invasion of Ukraine, Russia is facing sanctions like never before. These escalating penalties have been doled out by a great many nations, and the US appears poised to drive the final nail into the Kremlin’s economic coffin in just a matter of weeks.
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.
But then…
However, the Treasury Department’s Office of Foreign Assets Control allowed the exemption to expire early Wednesday morning.
Russia, whose leadership hasn’t exactly been working within the bounds of diplomatic reality as of late, will likely suggest that the default is “invalid” on account of certain aspects of the aforementioned sanctions.
This won’t stop the continuation of Russia’s economic collapse, however, as everyday citizens already begin to rise up and revolt against the Putin regime.
