Media: West pushing Russia into foreign debt default

A 30-day grace period for Russia’s payment of $100 mln in interest on eurobonds expired on June 27 but bondholders did not get the money, which creates grounds for a default, Bloomberg claimed. The Kremlin and the Russian Finance Ministry refused to confirm it as a fact because the country had made a payment but foreign infrastructure facilities failed to pass it through, Izvestia notes.

Legally, a default can be declared by rating agencies or 25% of investors based on a court ruling, Finam Analyst Alexey Kovalev explained. According to him, this time, it was Bloomberg that actually announced Russia’s default.

Unsurprisingly, it was widely covered in the Western media who described it as a result of the sanctions on Moscow, regardless of whether it really happened or not, the expert said.

Russia’s current ‘default’ is unique and completely artificial because the country has the money and the will to pay its foreign debts, Sovcombank Chief Analyst Mikhail Vasilyev told Vedomosti. "The West has deliberately pushed Russia into a default by making it impossible to pay the debt," the economist pointed out, adding that the situation was perfectly clear to all financial market participants. The expert does not see any serious consequences for Russia as a borrower because the country has been blocked off from the Western financial system since the start of the conflict in Ukraine. Russia has an abundance of dollars and euros based on the current-account surplus in its balance of payments so there is no need for external borrowing at the moment.

If the default is eventually recognized, the main risks for Russia will stem from the possibility of a cross default on its other foreign obligations and attempts to collect debts by seizing assets, Chief Economist at Otkritie Bank Maxim Petronevich stressed. However, given that Russia’s already frozen assets ($300 bln) many times exceed this amount, it does not change the situation much.

 

Nezavisimaya Gazeta: Tajikistan needs to choose between Russia or US

Russian President Vladimir Putin will visit Tajikistan’s capital of Dushanbe on his way to Turkmenistan’s capital of Ashgabat, where a Caspian Summit is set to take place on June 29. It is important for the Kremlin to figure out whether Tajikistan can be a reliable partner for Russia in the current situation, Nezavisimaya Gazeta writes.

First, there was the coronavirus pandemic, then the Taliban (outlawed in Russia) came to power in Afghanistan and now, the global situation is complicated, making it possible for the West to try to strengthen its influence in Central Asia. "A marked increase in the American activity with regard to Tajikistan is worth mentioning, which is one of the things that surely cause concern for Moscow," St. Petersburg State University Professor Alexander Knyazev pointed out.

According to him, Dushanbe’s policy towards the situation in Afghanistan is not only different from Russia’s but is fully in line with the approaches that the Americans and the Europeans apply to the Afghan track. However, in the expert’s view, if tensions start mounting on the Tajik-Afghan border, Dushanbe will turn to Russia, citing allied ties within the Collective Security Treaty Organization (CSTO).

The analyst believes Dushanbe needs to understand that Russia has been and remains the main and almost the only guarantor of Tajikistan’s territorial integrity and the current relative stability in the country. "Another thing to note is Russia’s de facto neutral position on the years-long perpetual military conflict on the Tajik-Kyrgyz border. Clearly, such a conflict between CSTO member states is not in Russia’s interests and it’s a pressing issue. Both Tajikistan and Kyrgyzstan earlier rejected Russia’s mediation offers but the thing is that there is no other way to solve the problem," the expert stressed.

 

Izvestia: Will NATO and Russia achieve progress in relations

A summit of the North Atlantic Treaty Organization is about to kick off in Madrid. The bloc is expected to declare Russia to be the most significant security threat. However, experts believe that such rhetoric does not mean that Moscow and Brussels cannot interact since the most realistic goal in the current situation is to build dialogue between the militaries in order to prevent any unintended escalation, Izvestia writes.

"Relations between Russia and NATO countries did not become this tense at a moment's notice," First Deputy Chairman of the State Duma Foreign Affairs Committee Dmitry Novikov emphasized. "It was a long process that made itself quite clear after Putin had stated at a Munich Security Conference that Russia had its own national interests. It was met with hostility because the West had been used to hearing totally different things from Russian leaders. The new rhetoric was taken as Russia’s desire to go beyond the role that it had been given," the lawmaker added.

"In politics, it is better to avoid strong language. It’s hard to say where Russia and NATO will be ten years from now," Russian International Affairs Council Director General Andrey Kortunov noted. "As for the short term, it’s definitely possible to raise the issue of resuming dialogue between the militaries. Neither Moscow nor Brussels is interested in any unintended escalation and this kind of direct interaction - both on the higher and the working level - is a goal worth pursuing. If the parties succeed, they will be able to gradually move towards more complicated and sensitive issues," the expert emphasized.

The NATO summit could serve as a catalyst for such a process, Kortunov said, adding that after dotting all the i’s, the parties might reasonably look at the areas where interaction would be possible.

 

Rossiyskaya Gazeta: G7 nations seek restrictions on Russian gold and oil

G7 members are determined to employ various methods to limit Russia’s revenues, the group’s leaders said in a joint statement at a summit in Germany. They particularly seek to restrict Russia’s gold exports and reduce their own dependence on Russian energy, Rossiyskaya Gazeta notes.

An embargo on Russian gold purchases (the country exported more than $17 bln worth of gold in 2021) was announced by the leaders of the United Kingdom, the United States, Japan and Canada. The European Union, however, is divided on the matter.

"G7 countries account for less than one-fifth of the world’s gold consumption, yet about half of the consumption comes from end customers in China and India. In such a situation, it’s hard to say how measures to control trade infrastructure will relate to the real gold consumption market. If a need arises, direct gold supplies are possible," Finam Analyst Alexander Potavin stressed.

Energy supplies are another area where G7 nations seek to reduce Russia’s revenues. The American proposal to enable Russian oil buyers to determine the maximum price they are willing to pay was discussed at the meeting but no specific decisions were made.

The initiative will make sense only if it involves all members of the European Union, as well as China and India, who are unlikely to support the move, BCS World of Investment expert Igor Galaktionov noted. In addition, some European countries almost entirely rely on Russian oil, which makes a consensus on such measures look questionable.

 

Izvestia: Russia ready to grant foreign ships access to Ukrainian ports

Russia is ready to grant additional foreign ships access to Ukrainian ports to export wheat but will inspect them together with Turkey to prevent weapons deliveries, Izvestia writes, citing a high-ranking source. According to him, four-party talks on the grain issue may take place in Istanbul later this week, involving Russia, Ukraine, Turkey and the United Nations. Experts believe that Black Sea nations - Turkey, Romania and Bulgaria - are most likely to help with exporting grain from Ukrainian ports.

According to the high-ranking source, Russia and Turkey are in talks on a route for foreign ships to Black Sea ports for grain exports because Ukraine’s fleet and the foreign vessels that currently are at Ukrainian ports may not be enough. Head of the Federation Council Foreign Affairs Committee Grigory Karasin confirmed to the newspaper that Moscow was willing to facilitate grain exports on foreign ships.

Turkish MP Ozturk Yilmaz, in turn, told the paper that cooperation between Ukraine and Russia was crucial for resolving the global food crisis.

Director of the Russian-Turkish Business Council Alexey Yegarmin points out that Turkey is currently acting as a mediator for the sales of Russian goods not only on usual markets such as the Middle East and Africa but also in the West. "There is high demand for our food products but some ‘unfriendly’ countries cannot purchase them either because they seek to act with decorum or because [Russia] refused to trade with some of them based on the principle of reciprocity. Turkish businessmen rightfully take on the role [of a mediator]," the expert specified. He noted that military activities in the Black Sea haven’t affected Russian wheat deliveries to Turkey as supplies continue from Novorossiysk and Port Kavkaz.

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