U.S. Treasury Okays Russian Interest Payment in Dollars from Frozen Funds

March 18, 2022 (EIRNS)—The U.S. “mother of all sanctions” against Russia apparently made an exception so that Russia could pay foreign speculators. Russia paid the $117 million in interest payment on foreign-held dollar bonds which came due on March 16, doing so in dollars from Russia’s assets frozen by the U.S. Treasury, thus avoiding default. And it did so with U.S. Treasury approval, various media reported.

CNN cited Russian Finance Minister Anton Siluanov’s statement that “we have the money, we made the payment, now the ball is in America’s court,” and reported that a spokesman for the Treasury said the United States would allow the payments to go through. If the U.S. had blocked the payment, Russia had said it would pay in rubles rather than dollars, but Fitch Ratings had warned on March 15 that if that happened, it could constitute a default, CNN reported.

CNBC’s version added the detail that the U.S. Treasury had said previously that sanctions enforced against Russia will not bar the country from making good on its international debt payments, at least until May 25.

There’s clearly more to this story. Tim Ash, a financial shark at BlueBay Asset Management, described the payment to CNBC as a “ridiculous move” by the U.S. Treasury Department’s Office of Foreign Assets Control. “The OFAC administers and enforces economic sanctions based on U.S. foreign policy objectives. ‘OFAC is bailing out Western bondholders who should have known better, and whose actions were working against Western security interests, and taking money in effect from a potential Ukraine reparation fund,’ Ash said via email Friday [March 18], noting Russians were the ‘biggest beneficiary’ of this bond payment.”

So now one thing we know is that at least some people were planning to permanently steal the Russian funds for a “Ukraine reparation fund”—which sounds an awful lot like what Biden did with the Afghan central bank money.

Meanwhile, TASS reported this morning that Russian President Vladimir Putin has reappointed monetarist Elvira Nabiullina as governor of the Bank of Russia, the central bank. At the same time, the Bank of Russia board met and decided to keep interest rates at 20%, a rate which will sink Russia’s physical economy if maintained for any period of time.