Global Sanctions Push Russia Closer to Debt Default

The U.S. Treasury Department has announced that it is not renewing the license that allowed Russia to pay debt holders through American banks.

This move, which will make it harder for Russia to pay its international debts, could push the country closer to default, as Russia is due to owe creditors roughly $2 billion by the end of the year.  Russia has indicated that it plans to contest any declaration of default, and suggests it has the funds to pay since it is rich in oil and gas supplies. However, Russia's debt was already downgraded in March to "junk status" by major ratings agencies, which makes it difficult for Russia to obtain funds in international markets.  A default by Russia would mean the first time since 1998 that the country has failed to pay its debt.

European Commission President Ursula von der Leyen said that the sanctions on Russia are crippling Vladimir Putin's "war machine" as fighting continues in eastern Ukraine. She also said the sanctions are "draining" the Russian economy. Wall Street Journal (Center bias) and others across the spectrum are also highlighting how the ruble is soaring despite Russia's various other economic crises resulting from global sanctions. See our Ukraine war page for the latest on the Russia-Ukraine conflict.