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The Krem­lin blinks first in the geo-eco­nom­ic war over Ukraine

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The ongoing geo-economic conflict between Russia and the West is a complicated one, surrounded by nearly as much disinformation and misinformation as the war in Ukraine itself. As such, both parties are confidently claiming to have the upper hand. But looking at the evidence at hand objectively, it becomes clear that the Kremlin is in retreat.

On April 29, Russia’s finance ministry announced that it would pay some $650m to foreign creditors on two overdue Eurobonds. And by making the payments before the bonds’ grace period expired on May 4, the Kremlin has avoided falling into sovereign default.

On the surface, this may look like a win for Russia. But in reality, the move was an embarrassing one for Vladimir Putin.

Ahead of the bond’s formal maturity on April 4, the Kremlin announced that it would buy back the bonds in roubles – and pay those who refused to accept the rouble buy-back as well. Nearly 75 percent of bondholders (almost certainly all domestic) agreed to the new terms .

Emboldened, the Kremlin announced on April 6 that it was also depositing roubles into accounts set up for other bondholders. The Credit Derivatives Determinations Committees judged this to be a “potential-failure-to-pay” event, ruling that Russia would effectively be in default if it fails to correct the situation by the aforementioned May 4........

© Al Jazeera

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