Now Ukraine is supposed to pay Russia billion in return for a Eurobond that Russian President Vladimir Putin issued in December 2013, but it has no reason to pay, the author writes.
Putin has repeatedly brought up this topic himself.
On October 13, he said, “But they need to return our money.
"Since Ukraine has already settled with the private bondholders, they do not mind if Ukraine does not pay Russia.
For Russia, whose current official international reserves are $375 billion, $3 billion is chump change, while such a payment could drive Ukraine into an acute currency crisis; its reserves are only $13 billion.
The IMF has an old practice of not lending to a country in arrears to a sovereign, but that practice should not be applied in this case.
There was a dispute over whether these bonds were to be recognized as sovereign debt, but now the IMF is changing its rule so that it no longer matters whether it is a private or sovereign debt.
On October 29, the deal was finalized with the exchange of the old Eurobonds for new ones.
Ukraine offered the same restructuring conditions to Russia for its bonds, but Russian Minister of Finance Anton Siluanov refused to accept these conditions and demands payment in full on December 20.
When the IMF has lent to Georgia and Ukraine, the other members of its Executive Board have overruled Russia.