Russia Sees Freeze of Gov't Foreign Currency Accounts as West's Bid to Organise Artificial Default

Moscow's ongoing special military operation in Ukraine to demilitarise and de-Nazify the country has triggered tough sanctions imposed by the US and its allies targeting key sectors of the Russian economy, export control and export financing, visa policy and Russian individuals

Russia sees the freeze of its government foreign currency accounts as the West's attempt to organise an artificial default, said Russian Finance Minister Anton Siluanov.

"Statements that Russia cannot fulfill its obligations under the public debt are not true. We have the necessary amount of funds to service our obligations. The freezing of foreign currency accounts of Russia's Central Bank and the government of the Russian Federation can be regarded as a desire of a number of foreign countries to organize an artificial default, while not having real economic grounds for this," said Siluanov, in a statement released by the Ministry of Finance.

"We are also ready to make payments in rubles at the exchange rate of the Bank of Russia on the date of payment. Moreover, for Eurobond issues issued since 2018, such an opportunity was laid down directly in the issuance documents," the minister added.

Russia began a special operation to demilitarize and de-Nazify Ukraine on 24 February after weeks of escalating shelling, sabotage and sniper attacks by Ukrainian forces against the Donbass republics, whose predominantly Russian-speaking population has been subjected to “abuse, genocide… for eight years."

Established in the spring of 2014 in response to the Western-backed coup in Kiev, the Lugansk and Donetsk People's Republics (LPR, DPR) refused to accept the overthrow of the country’s legitimate government and its replacement by ultranationalst and pro-western forces.

In February, Russia formally recognised the DPR and LPR, and launched its special military operation after the Donbass republics’ authorities asked for assistance to defend themselves from continued attacks by Ukrainian troops. The Russian government has repeatedly stated that the goal of the current operation was to neutralise Ukraine's military capacity and not harm the civilian population of the country.

In response, the US and its close allies across the globe have introduced harsh sanctions against Russian financial, aviation and energy assets, as well as the nation's Central Bank.

As US President Joe Biden announced a total ban on Moscow's energy imports, including oil and gas, last Tuesday, he also commented on the sanctions slapped on Moscow by the US and its allies as having already inflicted "significant damage" to the Russian economy.

"... The Russian ruble is now down by 50%...One ruble is now worth less than one American penny. And preventing Russia's central bank from propping up the ruble, and to keep its value up, they're not going to be able to do that now. We cut Russia's largest banks from the international financial system and it's crippled their ability to do business with the rest of the world," stated Biden.

However, in a statement commenting the sanctions, the Russian Central Bank said earlier that the banks are “retaining the high margin of stability and have a significant potential to develop business via loaning the Russian economy."

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