Russia Will Sue to Recover Ukrainian Debt

Russia Will Sue to Recover Ukrainian Debt

The Kremlin has also announced a food embargo against Ukraine effective 1 January.

22 December 2015

Russian Prime Minister Dmitry Medvedev (pictured) says he has set in motion preparations for a lawsuit aimed at recovering $3 billion owed by Ukraine.

 

Ukraine defaulted on the Eurobond debt to Moscow on 20 December. Kyiv has a 10-day grace period in which to make the payment without penalty, Medvedev said, Interfax-Ukraine reports.

 

For months, Kyiv had been threatening not to pay the debt – arranged by former President Viktor Yanukovych two years ago –arguing that it was a “private” arrangement, not the government-to-government deal Moscow claims.

 

Although some signs indicate that Moscow and Kyiv are willing to settle the dispute out of court, a lawsuit or arbitration battle in Britain is a growing possibility, Bloomberg says.

 

Should the dispute go to court, Russian Deputy Finance Minister Sergei Storchak (pictured) said Ukraine has “no chance of winning this case.”

 

Russia has refused to join in Ukraine’s $17 billion debt-restructuring deal with other creditors by allowing the Eurobond to be included in it, arguing it was a bilateral loan and not a standard bond.

 

Moscow has said it is ready to restructure Ukraine’s debt if the United States, European Union, or a major international financial institution provided guarantees to Russia.

 

The International Monetary Fund recently changed a rule that could have seen Ukraine lose the fund’s support. IMF policy had been to tolerate arrears to private creditors but not to sovereign states.

 

 

  • Also on 21 December, Medvedev signed a decree ordering a food embargo against Ukraine starting 1 January. He said the move was in response to Ukraine’s joining in Western anti-Russian sanctions, The Moscow Times reports.

 

  • Last week, Russian President Vladimir Putin ordered the suspension of an agreement for a free trade zone between Russia and Ukraine, also effective 1 January.

 

  • The EU said 21 December it was extending sanctions on Russia for another six months because the Ukrainian peace accords signed in Minsk will not be fully implemented by the end of the year. The sanctions affect Russia’s financial, energy, and defense sectors and target individuals linked to Crimea’s annexation and the conflict in eastern Ukraine, Radio Free Europe reports.

 

 

 

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