Ukraine war: US closing key avenue for Russian debt payment, bringing Moscow to edge of default
- The US Treasury Department says it does not plan to renew a licence that allows Russia to pay international investors through American banks
- Russia has not defaulted on its international debts since the 1917 Bolshevik Revolution, which led to the creation of the Soviet Union
The US will close the last avenue for Russia to pay its billions in debt back to international investors on Wednesday, making a Russian default on its debts for the first time since the Bolshevik Revolution all but inevitable.
The Treasury Department said in a notification that it does not plan to renew the licence to allow Russia to keep paying its debtholders through American banks.
Since the first rounds of sanctions, the Treasury Department has given banks a licence to process any bond payments from Russia. That window expires at midnight May 25.
There had already been signs that the Biden administration was unwilling to extend the deadline.
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At a press conference heading into the Group of Seven finance minister meetings in Koenigswinter, Germany, last week, Treasury Secretary Janet Yellen said the window existed “to allow a period of time for an orderly transition to take place, and for investors to be able to sell securities”.