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State Duma proposes Putin not to repay debts to countries that imposed sanctions

President of Russia can be given the right not to pay the debts to the countries and organizations that imposed sanctions against Russia. Such a bill was introduced in the State Duma by Vyacheslav Tetekin, a deputy from the Communist Party.

State Duma proposes Putin not to repay debts to countries that imposed sanctions

According to the draft law, in the case of announcement or imposition of sanctions against Russia by foreign states or international organizations, the president will have the right to suspend the operation of international treaties with them, including on issues related to foreign liabilities, Joinfo.ua reports with reference to the Russian media.

If the State Duma supports the bill, it may enter into force on June 1, 2015.

As it is known, the EU, the United States, Canada and other countries have imposed sanctions against the Russian Federation due to the annexation of Crimea and war in the Donbas. Tetekin considers the ban of the U.S. and the EU on access of Russian companies and banks to long-term and medium-term borrowing as the most sensitive sanction. The deputy reminds that many loans and credits have special conditions – covenants – according to which, "in the event of a sharp deterioration of financial condition of the borrower and/or the country in whose jurisdiction the borrower is (in this case – Russia), the lender (creditor) has the right to demand the borrower to repay the entire amount of the debt."

Tetekin suspects that this is what can happen with a number of Russian banks and companies. He admits that during 2016 "there may be exhausted all our reserves as a result of accelerated capital outflows and payments on foreign debts." "After that, the world's creditors will possess our banks and companies as the debts will not be fully repaid," said the deputy.

Western sanctions include an embargo on the supply of dual-use goods and complex technologies. Therefore, according to Tetekin, it would be fair to suspend the operation of treaties with the states and organizations involved in sanctions.

It should be recalled that President of the European Council Donald Tusk, German Chancellor Angela Merkel, and French President Francois Hollande agreed to extend the sanctions against Russia at least until the end of 2015.