A bond issued by the USSR Government in 1982

In the mid 1990s the newly restored Russian Government promised investors that it would repay the 1982 issued Soviet bonds. Now, Russian President Vladimir Putin must find a way to repay the approximately $785 trillion his government still owes. According to Bloomberg the debt would be “equal to almost half of Russian economic output.” Business Week describes a plan the government has to repay the debt, but it is slow and inefficient. The government was paying 50 billion rubles (Russian currency, approximately 3 Canadian cents) back per year; however the debt is 25 trillion rubles. In April, Putin halted the payments, which will resume in 2015, as a stall tactic to buy more time to plan. Putin is still paying the oldest owners of debt, but other citizens disagree with his methods. People have begun to go the European Court of Human Rights to aid them in receiving back their owed investments. While it seems Putin has managed to postpone the payments, I wonder when he will be forced to repay the remaining balances. This would cause a massive financial hit in Russia, most likely effecting the whole worlds economic status.

Media:

A Brief Summary of the Crisis in Russia (short video summarizing cause and effect)

Articles:

http://www.businessweek.com/articles/2012-09-06/soviet-bonds-are-haunting-putin

http://www.bloomberg.com/news/2012-08-27/brezhnev-bonds-haunt-putin-as-investors-hunt-for-785-billion.html