Weekend Economists Volvemos a Puerto Rico May 22-25, 2015

[Demeter]

57. Russia: If Ukraine defaults, expect a hard line from us

Russia would adopt a tough position if Ukraine decided not to pay off debts owed to Moscow by its previous government, Russian Prime Minister Dmitry Medvedev said in an interview broadcast by Russian TV on Saturday. Russia has spoken out against a new Ukrainian law allowing a moratorium on foreign debt repayments, threatening to take Ukraine to court if it fails to repay $3 billion that Russia lent it in 2013. In his interview, Medvedev called the new law "contradictory."

"Probably they are talking about private debts, but at the same time they are hinting that they aren't prepared to pay off the debts of the (former Ukrainian president Viktor) Yanukovich government," Medvedev said.

"If it is actually formulated in this way this would undoubtedly be a default of Ukraine ... We would adopt as tough a position as possible in this case and defend our national interests," Medvedev told the Vesti on Saturday program on state TV channel Rossiya.

He added that any such refusal would "undoubtedly influence the process of their agreement with the International Monetary Fund" — a seeming reference to IMF rules that require financial assistance recipients to honor debts to other governments.

Medvedev also said that Russia was "not indifferent" to debts owed by Ukraine to private Russian creditors, as the bulk of these debts are owed to banks with state ownership.

"We will collect (the debts)," Medvedev said. "Banks will use all instruments that exist, including, naturally, judicial procedures," he said.

Read more: http://uk.businessinsider.com/r-russia-to-adopt-tough-position-if-ukraine-defaults---pm-medvedev-2015-5#ixzz3b96YNila