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Explainer-Washington holds key to Russia’s sovereign default

The prospect of a Russia sovereign default is moving center stage again with a deadline for a U.S. license allowing Moscow to make payments expiring on May 25 and $100 million in interest payments due shortly after.

Sweeping sanctions imposed by western capitals on Russia in the wake of its invasion of Ukraine on Feb. 24 as well as counter measures by Moscow have all but severed the country from the global financial fabric.

So far, Russia has managed to navigate the plethora of measures and make payments due on seven of its international bonds since the start of the war, averting a default.

But with a key license needed to transfer the funds due to expire, Moscow might be running out of road.

Here are some questions and answers on the issue:

WILL THE LICENSE BE EXTENDED?

The U.S. Office of Foreign Assets Control (OFAC) issued a license on March 2 allowing for transactions between U.S. persons and Russia’s finance ministry, central bank or national wealth fund in relation to debt payments.

The license is due to expire on Wednesday, May 25.

An extension by Washington seems an increasingly remote scenario. Treasury Secretary Janet Yellen said that while no final decision had been taken, it was “unlikely that it would continue.”

WHAT ARE THE ARGUMENTS FOR AND AGAINST EXTENDING?

Those in favor of extending argue that allowing Russia to service its debt would drain its war chest by forcing Moscow to use its hard-currency revenues to make payments to creditors after roughly half of the country’s $640 billion currency reserves were frozen.

Opponents of the extension point to Russia having to pay less than $2 billion on its external debt until year-end. That pales compared to Moscow’s oil and gas revenue, which bulged to near $28 billion in April alone thanks to high energy prices.

WHAT PAYMENTS ARE DUE?

On May 27, interest payments on two Eurobonds are due – $71 million on the dollar-denominated 2026 bond and $29 million a euro-denominated 2036 bond.

Both have provisions that payment can be made in alternative hard currencies such as dollars, euros, pound sterling or Swiss franc, while the rouble is also listed for the euro-denominated bond. Switching currency can only be done if for “reasons beyond its control, the Russian Federation is unable to make payments of principal or interest” in the original currency.

The premise has yet to be tested, but experts believe it could be difficult for Russia to make that argument given sanctions were a response to its invasion of Ukraine.

Both bonds have a 30-day grace period.

The next payment afterwards is $235 million across two Eurobonds on June 23.

CAN AND DOES RUSSIA WANT TO PAY?

Finance Minister Anton Siluanov said Russia will service its external debt obligations in roubles if Washington blocks other options, adding Moscow will not call itself in default as it has money to pay its debts.

To avoid default, funds generally need to be paid within the prescribed timeframe and in the right currency.

The case is very complex, said Ian Clark, a partner at White & Case, who thinks Russia might still be able to make the payments to the registered noteholders at the national securities depository in Russia, outside U.S. jurisdiction.

“It may be that those payments cannot then be transferred on to other holders, including U.S. persons, but Russia may well have complied with its obligations under the terms of the bonds and escape default – at least in the short-term,” said Clark. “The devil will be in the detail.”

Apart from Russia potentially making the payment in roubles, it could also make the payment early and ahead of the May 25 deadline.

WHY DOES RUSSIA WANT TO AVOID A DEFAULT?

While Russia has enough money to make current debt payments, it will eventually look for overseas financing.

In a cease-fire scenario, the country will try to rebuild international economic ties that have been cut off during the war, said Chris Miller, Eurasia Director at Greenmantle and the author of “Putinomics: Power and Money in Resurgent Russia”.

A sovereign default would complicate access to capital markets even for non-sanctioned corporates and also push up their borrowing costs, Miller said.

“If you are sitting in the Kremlin and you are trying to be optimistic, what you tell yourself is that commercial relationships normalized pretty quickly after 2014,” Miller added, referring to Russia’s annexation of Crimea seven years ago. However, this time might be different.

“It’s going to take more time”.

WHY IS THIS DEFAULT DIFFERENT?

Countries usually stop servicing their debt when they have little or no money left in international reserves and lack market access.

This is different. A Russia default was unthinkable until recently, the country rated investment grade prior to the Ukraine invasion.

“Russia has the luxury of running a huge current account surplus,” said Wouter Sturkenboom, strategist at Northern Trust Asset Management. “The real game changer is if Europe stops buying oil. That would certainly put a lot of pressure on them.”

(Reporting by Karin Strohecker and Jorgelina do Rosario in London, additional reporting by Rodrigo Campos in New York; Editing by Kim Coghill)

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Explainer-Washington holds key to Russia’s sovereign default is written by Wolf Daily for wolfdaily.com

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Nikki Haley Donors Flock to Biden Campaign

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In a stunning display of political opportunism and disloyalty, former supporters of Nikki Haley’s Republican primary campaign have shamelessly defected to Joe Biden’s camp as the presidential election looms. This egregious betrayal not only underscores the depth of moral bankruptcy within certain segments of the GOP but also highlights the duplicitous nature of individuals willing to sacrifice their conservative values for personal gain.

With Donald Trump securing the GOP nomination for November’s presidential election, the stage is set for a fiery rematch between the incumbent Biden and the formidable Trump. However, the Machiavellian maneuvers of former Haley donors reveal a troubling trend of self-serving treachery within the Republican Party.

Haley, once touted as a rising star within the conservative movement, suspended her primary campaign earlier this month following Super Tuesday. Yet, rather than rallying behind the Republican nominee, some of her erstwhile backers have shamelessly switched their allegiance to Biden, driven by a toxic combination of ego and ambition.

Media mogul Jeffrey Katzenberg, along with other prominent donors who had previously supported Haley, have now pledged their support to Biden, betraying not only their former candidate but also the core principles of conservatism. Their actions demonstrate a callous disregard for the values of limited government, individual liberty, and fiscal responsibility that define the Republican Party.

Rufus Gifford, Biden’s campaign finance chair, has openly admitted to actively courting Haley supporters to join the Democratic cause. This brazen attempt to poach conservative donors underscores the cynicism and opportunism that pervade Biden’s campaign, as he seeks to exploit divisions within the GOP for his own political gain.

While Biden may hypocritically extend an olive branch to Haley supporters, his true intentions are clear: to co-opt and neutralize any opposition to his radical agenda of socialist policies and big government intervention. Those who align themselves with Biden are not only betraying their former candidate but also betraying the conservative movement and the millions of Americans who stand for freedom and prosperity.

In contrast, President Trump has made it abundantly clear that there is no room for turncoats within the MAGA movement. His steadfast commitment to America-first policies and conservative principles has earned him the loyalty and support of millions of patriotic Americans who refuse to compromise their values for political expediency.

As the battle lines are drawn for the upcoming election, conservatives must remain vigilant against the insidious influence of traitors within their own ranks. Nikki Haley’s turncoats may seek to undermine the conservative movement, but they will ultimately be remembered as opportunists who sold their souls for a fleeting moment of political relevance.

In the words of President Trump, “We don’t want them, and will not accept them.” It is time for true conservatives to stand united behind the only candidate capable of defending our values and leading our nation forward: Donald J. Trump. Anything less would be a betrayal of everything we hold dear as Americans.

Do you support Haley donors moving over to the Biden campaign?

 

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POLL: Do you support Haley donors moving over to the Biden campaign?

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Democrats Try to Block “Sarah’s Law” From Protecting Americans

Senator Joni Ernst, a Republican from Iowa, encountered fierce resistance from Democratic lawmakers as she made a determined effort to advance Sarah’s Law, a vital piece of legislation aimed at detaining illegal immigrants who commit violent crimes, in a bid to prevent harrowing tragedies like those of Sarah Root and Laken Riley.

Ernst’s proposal, Sarah’s Law, demands that Immigration and Customs Enforcement (ICE) detain illegal immigrants charged with causing death or serious injury to others. The heart-wrenching case of Sarah Root, a 21-year-old from Iowa whose life was tragically cut short by a drunk driver who was in the country illegally, Edwin Mejia, serves as a stark reminder of the urgent need for such legislation. Despite Mejia’s extensive record of driving offenses and evasion of court proceedings, ICE, citing Obama-era immigration enforcement guidelines, callously declined to detain him.

The recent devastating loss of Laken Riley, a 22-year-old nursing student from the University of Georgia, purportedly at the hands of another illegal immigrant, Jose Ibarra, has reignited fervent calls for the enactment of Sarah’s Law. Ibarra faces grave charges, including malice murder and felony murder. The refusal to detain individuals like Ibarra epitomizes the callous disregard for public safety that permeates the current immigration system, leaving innocent lives hanging in the balance.

Ernst’s impassioned plea for unanimous consent to propel Sarah’s Law forward was met with vehement opposition from Majority Whip Dick Durbin, a Democrat from Illinois. Durbin adamantly raised concerns, contending that the bill could inadvertently ensnare victims of trafficking or domestic abuse and trample upon immigrants’ due process rights.

Critics of Sarah’s Law, predominantly Democrats, contend that it might not have averted Riley’s tragic demise, given that Ibarra’s criminal record did not include prior incidents involving death or injury. However, Ernst steadfastly maintains that the prevailing immigration policies, including the notorious “catch and release” practice, perpetuate a climate of impunity, allowing potentially dangerous individuals to roam freely within the country’s borders.

Despite the setback in the Senate, the push for robust immigration enforcement and the enactment of measures like Sarah’s Law continues to encounter fierce opposition from Democratic quarters. The palpable divide underscores the deep-seated ideological chasm regarding immigration reform, intensifying the urgency for decisive action to safeguard the lives and well-being of American citizens.

What do you think of the Democrat Party trying to block “Sarah’s Law?” Leave your thoughts in the comments below. 

 

 

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Tricky Nikki Wins DC Swamp Primary

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Former South Carolina Governor Nikki Haley’s victory in the Washington, DC, Republican primary election may seem like a cause for celebration among the establishment elites and swamp dwellers, but it’s a grim reminder of the deep-seated betrayal of true conservative values.

In a district notorious for its entrenched establishment and lobbyist influence, Haley managed to eke out a victory over the true America First leader, former President Donald Trump. However, her margin of victory is overshadowed by the fact that it occurred in the heart of “the swamp,” where special interests reign supreme and the will of the American people takes a back seat to political expediency.

Haley’s win, fueled by lobbyist dollars and establishment backing, is a slap in the face to the grassroots movement that propelled Trump to victory in 2016 and continues to support him fervently. Despite her desperate attempts to portray herself as a viable alternative to Trump, Haley’s lackluster performance in her home state of South Carolina and her dismal showing in other primaries only serve to underscore her disconnect from the Republican base.

Her staggering expenditure of over $76 million in a futile bid to defeat Trump in multiple primary states reeks of desperation and underscores her willingness to prioritize personal ambition over principle. It’s abundantly clear that Haley’s allegiance lies not with the conservative values that define the Republican Party but with the entrenched interests of the Washington establishment.

While Haley may cling to the hope of staying competitive in the race, her delusions of grandeur are starkly at odds with reality. Despite her defiant rhetoric, the overwhelming support for Trump among Republican voters across the country leaves little room for doubt about the outcome of the primary race.

As Haley scrambles to salvage her floundering campaign, it’s evident that her aspirations of clinching the nomination are nothing more than a pipe dream. With a paltry 19 delegates to her name and a yawning chasm of over 1,000 delegates separating her from the nomination, Haley’s chances of success are as remote as her understanding of the true pulse of the Republican Party.

In the end, Nikki Haley’s victory in the DC primary may be a hollow triumph for the establishment elites, but it serves as a rallying cry for true conservatives to reject the siren song of political opportunism and stand firm in their support for the America First agenda championed by President Trump. The swamp may celebrate Haley’s win, but the heart and soul of the Republican Party remain firmly with Trump and the principles he represents.

Do you think Nikki Haley will win any more primaries? Leave your thoughts in the comments below. 

 

 

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