Russia expects Germany's mediation in Ukraine's debt issue, talks under way - Siluanov
VLADIVOSTOK/MOSCOW. Oct 29 (Interfax) - Russia has every ground to expect Ukraine to settle its $3 billion Eurobond debt, at the same time, Russia is open for talks on this issue, is in talks on it with Germany, which has usually acted as a mediator in the talks on possible debt settlement, Russian Finance Minister Anton Siluanov said.
"You know that we have every ground for this. There is a London High Court's judgment. An appellate instance will be considered at the beginning of next year, I am convinced that an objective decision will be made, and we will have every ground to demand that our neighbor implement its obligations. At the same time, we are open for talks with Ukrainian colleagues. The primary condition is that we should recover the full debt from Ukraine, namely, $3 billion, and our conditions should be better than those of commercial creditors. We are holding such talks, I am convinced that a proposal, a proposal to Ukraine to fulfil its obligations will be found," he said in the Deistvuyushchiye Litsa (Persona) show hosted by Nailya Asker-Zade on Rossiya-1 television.
The minister said that he had been discussing the Ukrainian debt issues with his German counterpart. "We are having very close talks with the German finance minister, are discussing such complicated issues, as, say, relations between Russia and Ukraine with respect to the Ukrainian debt repayment to our country. And such mediation in complex issues by the German minister is extremely helpful for us," he said.
Earlier in September, Ukraine has paid a portion of Russia's court expenses in proceedings regarding debt on Russian Eurobonds the country bought, fulfilling the decision of the London court hearing the case.
In December 2015 Ukraine defaulted on $3 billion in Eurobonds the country had bought from Russia shortly before a change in government in Kyiv, along with $75 million in the final coupon payment. Ukraine proposed that Moscow accept the same debt restructuring terms reached with Ukraine's major commercial creditors, but Russia rejected the idea, insisting that the bond was sovereign debt. Ukraine was to clear the debt before January 1, 2016. However, Kyiv imposed a moratorium on servicing this debt in December 2015 and failed to pay a total of $3.075 billion before January 1, 2016 toward servicing and clearing the Eurobonds belonging to Russia.
After that, the Russian Finance Ministry filed a lawsuit in High Court of Justice of England on February 17, 2016, seeking to secure repayment of the debt.
On May 27, Ukraine filed objections against the lawsuit. On July 28, Russia filed a petition with the London High Court to make the decision in the case under a quick procedure.
Meanwhile, the Russian and Ukrainian finance ministers planned to hold a meeting as part of the G20 financial meeting in Washington in October 2016 in order to discuss the possible pre-trial settlement. However, the Russian minister did not arrive in Washington, and it was planned to move the meeting to Germany to late October. But this meeting did not take place after all. Russia views any meetings pointless, if Ukraine does not intend to change its stance on debt, Siluanov said later. Russia's principled stance was that the debt restructuring talks are possible only if the Ukrainian debt is recognized sovereign, but not commercial. This demand put forth by Russia as a precondition for talks between the parties on possible debt settlement indicated that the Russian side is unwilling to hold such talks, his Ukrainian counterpart Oleksandr Danyliuk said later.
The High Court ruled on March 29, 2017 to endorse a quick procedure for hearing the suit, in fact rejecting Ukraine's principal objections and agreeing that it had a debt on Eurobonds. The court recognized that the transaction was a standard one, even though it was concluded in unusual circumstances. However Russia is unable to collect debt on the $3 billion Eurobond until a decision is pronounced on an appeal lodged by Ukraine whose hearing is planned for January 2018.
In addition, the London High Court ordered Ukraine to compensate a portion of Russia's expenses connected with case proceedings, totaling 2.8 million pounds sterling. Ukraine was ordered to pay half of the sum no later than September 20, 2017. The court decision that Russia's request to compensate the remaining portion of expenses incurred due to obligations on the bond not being fulfilled will be reviewed after a decision is pronounced on an appeal that Ukraine submitted in June regarding the High Court's verdict.