Bond of War: Russian Geo-Economics in Ukraine’s Sovereign Debt Restructuring is the fifth of a series of reports in the Foreign Policy Research Institute’s Russia Political Economy Project. To learn more about this initiative, click here. To download the report, click here.

Executive Summary

Russia and Ukraine have spent the last four years locked in a conflict with many fronts, from the battlefields of Donbas to the servers of Ukrainian businesses. This paper will examine one under-studied front: the dispute between Russia and Ukraine over a contested $3 billion Eurobond sold by Ukraine’s government and purchased by Russia’s National Wealth Fund in December 2013.

The paper first outlines the sale of the bond and then examines a number of specific contractual terms that have proven controversial. The paper next explains how the dispute led from the halls of the International Monetary Fund (IMF) to a British courtroom. It then looks to identify Russia’s geo-economic strategy in the loan and subsequent legal dispute. Next, the paper positions this strategy within global developments in geo-economic policymaking, sovereign bond markets, and Russian foreign policy. Finally, it concludes by examining the dispute’s implications for Russian geo-economic policy and sovereign debt markets.