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. Last Updated: 07/27/2016

German Official Ups Pressure on Russia to Pay Debt

BERLIN, Germany - Russia's refusal to fulfill its debt obligations will hinder its hopes of becoming a full member of the Group of Eight leading industrial nations, a senior German Finance Ministry official said in a newspaper interview published Thursday.

"The current behavior of Russia isn't compatible with the demand to become a full member of the G-8," Caio Koch-Weser told the Financial Times Deutschland.

In the G-8 now, Russia joins the other seven industrialized nations - the United States, Italy, France, Britain, Germany, Japan and Canada - for political discussions, but is excluded from economic talks.

Russian leaders have said in recent weeks that Moscow would not be able to pay $3.5 billion in Soviet-era debts due this year to the Paris Club of creditor nations, even though Russia last year reaped unexpectedly high revenues thanks to booming world oil prices.

Koch-Weser dismissed arguments that Russia's budget doesn't allow for the payments.

"The Russians knew very well in the drafting of their budget what they have to pay this year," he said. "If not enough money has been earmarked, then the budget needs to be revised."

Koch-Weser also repeated Paris Club warnings that Russia's standing in international financial markets would suffer if the country failed to meet its debt obligations in full.

Germany, which is owed about half of Russia's Paris Club debt, has said it would be willing to seek a broad debt restructuring deal for Russia if the country's economy faced serious difficulties, including a sharp drop in oil prices.

But Germany insists that a default by Russia on debt owed to the Paris Club would be unacceptable. It also rules out any debt write-off for Russia on the grounds Russia shouldn't be treated as an underdeveloped country when it comes to debt relief.