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. Last Updated: 07/27/2016

EDITORIAL: Rude Bluster Won't Win Any Respect




Russia desperately needs to win the support of Western creditors, but the vague, fantastical and truculent remarks that the government and the Central Bank made Thursday will only confirm fears that Russia has no serious plan on how to pay off its debts.


Russia is not exactly in a strong bargaining position. On one hand, it has already defaulted on about 240 billion rubles of treasury bills, about a third of it to foreigners.


And, unless the International Monetary Fund stumps up another big loan, by the end of this year Russia will also have started the process of defaulting on its $150 billion hard-currency debt.


Yet Central Bank chairman Viktor Gerashchenko on Thursday seemed to think that the best way of securing the good will of Russia's creditors was to insult them and bluster at them.


Gerashchenko warned that "greedy" and "stubborn" foreign banks will end up getting nothing. If he keeps talking like that, the IMF and the world financial community are likely to tell Russia to get lost too.


Equally damaging were Deputy Prime Minister Alexander Shokhin's proposals for the debt crisis.


In an attempt to win friends in Western financial circles, Shokhin last week pledged to restructure Russia's treasury-bill debts. Foreign bankers were aghast at the forced debt restructuring imposed on them Aug. 25, which basically gave them a return of only a fraction of their investment.


But despite much hype, Shokhin failed to provide any plan Thursday for what to do about the treasury-bill debts, even though the renegotiation was his idea. It would have been better if Shokhin had kept his mouth shut instead of making unfulfillable promises of a more generous rescheduling.


Apart from promising more talks, Shokhin only repeated a pledge not to discriminate against foreign investors. But they know full well that the Central Bank is already favoring Russian banks by buying back their treasury bills at inflated prices.


Shokhin's proposal for meeting Russia's hard-currency debt was especially silly. He talked about "netting out" Russia's debts to the Paris Club against the debts that the Paris Club owes to Russia.


What he meant was that Western banks should accept as payment for their loans the debts that Russia inherited from destitute Soviet client states like Nicaragua, North Korea and Iraq. The West, it seems, is supposed to pick up the tab for the Cold War.


Ultimately, there is nothing Russia can say that will please foreign creditors. But it should at least try to talk sense and behave decently.