Ukraine Has No Chance of Winning $3Bln Debt Case Against Russia

Prime Minister Arseny Yatseniuk said on Friday that Ukraine would not repay the Eurobond when it matures and that Kiev was geared to fight the issue in court.

“Till our proposals on restructuring are adopted or till the relevant judgment is delivered”, Yatsenyuk added.

Ukraine’s Finance Minister Natalie Jaresko said the country was “committed to working in good faith to finding a resolution”, and that talks with the Russian side were continuing. The fact that Ukraine failed to pay back $3 billion plus $75 million of loan interest should be officially recognized upon expiry of a 10-day grace period after the payment deadline.

The Government of Ukraine has imposed the moratorium on repayment of the so-called Russian debt.

Moscow and Kiev have been locked in a bitter showdown over a Russian $3 billion loan granted to the pro-Moscow regime of ex-president Viktor Yanukovych in December 2013, not long before he was ousted and fled to Russia.

It followed the overthrow of a Moscow-allied president in Kiev and Russia’s annexation of the Crimean peninsula from Ukraine in what grew to be the biggest spat between Moscow and the West since the Cold War.

Moscow has refused such conditions and insisted that the bond was an official debt – a viewpoint shared by the International Monetary Fund.

On Wednesday, Russia said it would suspend a trade pact with Ukraine that would exclude the country from a free trade zone that includes former Soviet countries from 1 January.

“Russia has refused, despite our repeated attempts to sign the agreement for restructuring, to accept our proposals”, Yatsenyuk said during the Friday speech.

“Given this, as well as the IMF’s concerns voiced today about parliament’s rejection of the new tax code and 2016 budget, there seems to be a growing risk that the country’s bailout could be put on hold”.

Relations between the two sides became even more tense in October, when Russian Federation was the only one of a group of creditors not to approve Ukraine’s plans to restructure $18bn of sovereign Eurobonds.