Oil Prices Hurting Putin More Than Ukraine Crisis

oil pumpForbes

By Kenneth Rapoza

Oil prices are hurting the Russian economy more than the Ukraine crisis. Despite sanctions and a lock-out of Russian banks from tapping credit from Western lenders, Vladimir Putin may still have the upper hand, at least strategically.

Washington’s man in Kiev, Prime Minister Arseniy “Yats” Yatsenyuk, continues to portray Russia as the reason for all of Ukraine’s troubles. But, as theFinancial Times’ John Dizard recently noted, “the Russians have tactically out-maneuvered the U.S. and Europe in the financial markets,” with the Pentagon reportedly “studying Russia`s financial market moves in Ukraine to see how similar tactics might be used in future military crises.”

Russia purchased Ukrainian bonds under foreign law last year. The U.S. calls this the “the booby-trap bond” – a $3 billion issue due to Russian bond holders Dec. 2015. The bond is enforceable under English law, and was registered on an Irish exchange. It has cross default clauses that are triggered if Ukraine misses a payment to any other entity controlled or majority owned by Russia. And guess what? That includes a $1.6 billion payment owed to Gazprom and due this month.

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