What Madrid and a Eurobond default signalled

What did the West's pressure on Russia look like on 29 June 2022? Two reports from that period gave part of the answer: a security announcement at a NATO summit and a financial default that Moscow dismissed.

A permanent base in Poland

At the NATO summit in Madrid, U.S. President Joe Biden announced on 29 June 2022 that a new permanent U.S. military base would be established in Poland. It was to be the 5th Army's Headquarters, which had had a forward command post in Poznań since the previous year. Poland's government had long requested such a base.

The default two days earlier

On 27 June 2022, Russia defaulted on two Taiwanese-owned Eurobonds worth US$100 million. As reported at the time, Western sanctions had led Euroclear to block Russian attempts to service the debt before the previous day's deadline. Russia described the default as artificially manufactured and "a farce".

As reported then, the default was expected to have few immediate consequences for Russia, because the country was already unable to borrow internationally owing to the SWIFT ban on Russian banks.

How the default was later described

Later accounts described the 27 June default as Russia's first foreign sovereign debt default since 1918, although the country had defaulted on domestic ruble-denominated government debt in 1998. They also said that on 2 June Russia had missed a payment of $1.9 million, an amount too small to trigger a cross-default on other instruments, since the threshold is at least $75 million. The same accounts said the default arose from technicalities, because dollar payments were impossible under US and EU sanctions, and did not reflect an actual inability to pay.