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Russia's default and NATO's Poland base decision
Summary
A look back at two developments from late June 2022: Moscow's missed Eurobond payments and a new permanent U.S. base announced for Poland.
What did Russia's missed bond payments and a new U.S. base in Poland have in common on 1 July 2022? Both were products of the confrontation with the West, and both had been reported in the days just before that date.
A default driven by sanctions
On 27 June 2022, Russia defaulted on two Taiwanese-owned Eurobonds worth US$100 million. Western sanctions had led Euroclear to block Russian attempts to service the debt before the deadline. Russia described the default as artificially manufactured and called it "a farce".
As reported at the time, the default was expected to have few immediate consequences for Russia, which was already unable to borrow internationally because of the SWIFT ban against Russian banks. Later accounts described the event as Russia's first foreign sovereign debt default since 1918, and said it stemmed from technicalities: sanctions by U.S. and EU authorities made dollar payments impossible, rather than any actual lack of capability to pay. Earlier, on 2 June, Russia had missed a payment of $1.9 million, which was not enough to trigger a cross-default on other instruments because the threshold is at least $75 million.
A permanent base for Poland
On 29 June 2022, at the NATO summit in Madrid, U.S. President Joe Biden announced that a new permanent U.S. military base would be established in Poland. It would house 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.
Reading the two together
The two announcements pointed in different directions: one showed financial channels being closed to Russia, the other showed a lasting U.S. military presence being added in Poland, a step Warsaw had sought for years.
