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Saturday, March 24, 2018

Poroshenko does not recognize the sovereign debt of Russia

The first month of next year, promises will be hot. At least, the High court of London, who will render a verdict in the confrontation between Russia and Ukraine on the issue of debt repayment by the Square on Eurobonds purchased by our country in 2013. Kiev does not want to pay, citing the fact that the securities were sold by the government of Viktor Yanukovych and bought by Moscow to support the regime of ex-President of Ukraine. Kiev says that this debt is not sovereign and has no relation to the current Ukrainian government. The Cabinet of Ministers Petro Poroshenko claims that this debt must be equated with debt obligations to private investors. Then $3 billion debt to Russia will be cut by 20% and transfer their pay in the period 2021-2040 years. Russia insists that it is sovereign debt and its repayment, which was held in the fall of 2015, expired. The final decision on this issue should bear the High court in London on 17-20 January 2017.

photo: Natalia Gubernatorova

Ukraine is a strange and wonderful country. State that over the past quarter century so stained reputation, has accumulated huge amount of external debt, was convicted of theft of gas, internal corruption and many other illicit activities, continue to lend, even in spite of past transgressions.

So, in mid-September, the international monetary Fund transferred the next tranche of loan to Ukraine in the amount of $1 billion This step guaranteed the possibility of obtaining the Square new loan guarantees from the U.S. on the same amount, as well as attracting 600 million Euro loan from the EU and other financial support.

Moreover, Ukraine’s Finance Ministry expects October 26, will visit Kiev one more IMF mission to coordinate the allocation of Square additional loans.

Only it is unlikely the money will be lent to the development of the Ukrainian economy. This debt breaks Kiev to pay off liabilities of previous years. According to the IMF, Kiev can get in 2016, an additional $1.3 billion, and in 2017 — about $5.4 billion, the Ukrainian government promised to use these funds to strengthen international reserves, and restructuring existing loans.

But to pay the obligations to the Russian government of Petro Poroshenko is not going to. The reason this is the fact that Kiev recognizes a debt of $3 billion, which the Square has received from our country for its Eurobonds in 2013, sovereign. If this debt is not sovereign, then it is possible to calculate commercial. Then Ukraine would get the opportunity to knock off this amount by 20% and defer payment until the 2021-2040 period of years.

But Russia’s position remains ambiguous. As stated by the head of the Ministry of Finance Anton Siluanov, the negotiations with Ukraine on its debt to Russia in $3 billion can take place only if it is recognized as sovereign “We will talk only after we realize that there are grounds for negotiations, namely, the duty recognized the sovereign”, — said the Minister.

According to Siluanov, to discuss anything “makes no sense”. The meaning occurs only in a few months. In February 2016, Russia appealed to the High court of London to pay for these obligations. According to preliminary data, London’s High court has appointed date of consideration of the Russian claim on 17-20 January 2017.

According to the chief of analytical Department UK “BK-Savings” Sergei Suverov, from a legal point of view, Ukraine’s debt in Eurobonds is sovereign. This agreement was concluded at the international level, so his status should be the only way. So the chances to win litigation in London and was ordered to pay the money on the basis of international law Russia is very high. “However, Kiev will have to pedal that this loan was granted for political reasons. In this regard, it is hoped that London’s High court will be impartial and will not rely on the politically motivated”, — Sergey Suverov.


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