UPDATED: Kremlin says debt default theoretically possible but there are no grounds for real default
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April 6 (Reuters) – Russia could in theory find itself in default but this would be an artificial situation, the Kremlin said on Wednesday, after the finance ministry decided to make payments on its two sovereign Eurobonds in roubles.
There are no grounds for a real default, Kremlin spokesman Dmitry Peskov said, adding that Russia has all necessary funds to service its obligations but will continue to repay its external debt in roubles while its foreign exchange reserves remain blocked by Western sanctions.
Russia wants to maintain diplomatic relations with Western countries despite a series of expulsions of its diplomats, Russian Deputy Foreign Minister Alexander Grushko said on Wednesday.
Several European countries including France, Belgium, the Netherlands and Italy have expelled large numbers of Russian diplomats in recent days.
The moves coincide with outrage across Europe over reports of the discovery of mass graves and of civilian killings in the Ukrainian town of Bucha following the retreat of Russian forces conducting what Moscow calls its “special operation” in Ukraine.
Grushko told Interfax that Russia, which has pledged to respond to the expulsions, was assessing the decisions by European countries.
“Nevertheless our position remains absolutely the same: we advocate for diplomatic channels to remain open.”
Grushko said European countries disrupting the work of Russian diplomats were damaging their own interests and warned against any potential action against the Russian exclave of Kaliningrad, wedged between Poland and Lithuania on the Baltic seaboard.
“I really hope that common sense in Europe will not allow any games to be started around Kaliningrad,” TASS quoted him as saying. “I think many understand that this would be playing with fire.”
Grushko said Russia had “no contact with NATO”.
“There is nothing to discuss with NATO,” TASS quoted him as saying.
Russia sent tens of thousands of troops into Ukraine on Feb. 24 in what it called a special operation to degrade its southern neighbour’s military capabilities and root out people it called dangerous nationalists.
Ukrainian forces have mounted stiff resistance and the West has imposed sweeping sanctions in an effort to force Russia to withdraw its forces.
