The former republics of the Soviet Union breached their agreements to give Russia their assets abroad, said Russian President Vladimir Putin on Wednesday while meeting with the work group for drafting amendments to the constitution.
According to Putin, when the Soviet Union collapsed, Moscow undertook to repay the debts of all the former Soviet republics, in exchange for which they agreed to give Moscow their foreign property.
“The whole world was very happy” when Russia undertook to pay these debts, the president emphasized, adding that “everyone agreed that we are the legal successors when loans had to be repaid for the republics of the former Soviet Union”.
However, the republics failed to keep their commitments, he remarked. “We repaid the loans for everyone, but several newly formed states in Soviet Union space did not give us their assets abroad,” TASS cites Putin as saying.
He added that for Ukraine alone, Russia repaid $16 billion.
The Soviet Union’s debt problem arose in the last six years of its existence, when in 1985 Saudi Arabia dramatically increased its oil production, and the price per barrel dropped by two thirds – from $32 to $9.5 – in the space of a few months.
The sale of hydrocarbons abroad was essentially the Soviet Union’s sole source of hard foreign currency, which it used to pay for imported grain, equipment, consumer goods and technologies. When faced with a shortage of oil revenue, the Soviet leadership approached the West for loans. As a result, the USSR’s total foreign debt doubled between 1985 and 1989, and the net amount (not covered by reserves) tripled, from $11.2 to $31.3 billion.
According to the State Bank of the USSR’s final assessment in 1989, the Soviet Union’s foreign debt amounted to $45.8 billion. According data from the Central Bank of Russia, available from 1994 onward, this amount was already $104.5 billion, of which roughly half ($47.6 billion) was owed to the London club of creditors, and the rest to the Parisian club ($27.3 billion) and to former socialist countries ($27.5 billion).
By 2001, Russia had repaid around $10 billion of these loans and restructured its debt to the London club, issuing $20.5 billion in eurobonds, which had been completely repaid by 2017.
Russia’s primary debt was almost fully repaid in two major tranches in 2005 and 2006-7. In October last year, according to the Bank of Russia, the Russian Federation owed only $475 million of the debt inherited from the USSR. Of this amount, $20 million was owed to socialist countries, and the majority – $454 million – to “other official creditors” not specified by the statistics.