by Peter Zeihan on June 29, 2022
US bond rating service Moody’s announced that Russia was in default of its foreign debt payments yesterday, a first for Moscow since 1918. Unlike most countries who go into default, Russia has the money to pay its debts. But the sanctions put in place following the invasion of Ukraine, Moscow does not have a reliable mechanism to deliver payment to its debt holders. While the Russian central bank is trying to argue that this does not constitute a technical default, the episode does highlight some of the particularities of the approach the US and its allies are taking in sanctioning Moscow and the rest of the world is taking note.