The United States is poised to force Russia into sovereign default, despite Russian protestations that such a default would be "artificial." While its immediate impact on the Russian economy will be relatively minor compared to the immense challenges Moscow already faces, a default could aid efforts to seize Russian assets abroad and poses limited risks to international bondholders. U.S. Treasury Secretary Janet Yellen on May 18 said that the Treasury Department's Office of Foreign Assets Control is likely to let a temporary exemption expire May 25. The exemption had allowed the Russian government to pay coupons to its U.S. bondholders and avert a default on its government debt. After what is reported to have been intense debate, U.S. authorities appear to have concluded that forcing Russia into default would erode the Kremlin's ability to finance its invasion of Ukraine, and that the harm to U.S. holders of Russian bonds will...
