Russia is looking for ways to repay, while the United States blocks repayment channels. This cycle of "you want to pay it back, I won't let you pay it back" goes on and on, and an impending Russian debt default could become one of the most intractable problems in history, and could even lead to a permanent US freeze on Russian central bank assets.

As the dispute between Russia and Ukraine continues and Western sanctions have increased, the risk of Russian debt default has risen sharply, facing the first foreign debt default since 1918.

Let's first review the game of "you hide from me" between the United States and Russia over the past month. After the United States froze Russian overseas assets, Russia cleverly repaid its US dollar debt through frozen overseas foreign exchange accounts; after the United States discovered this loophole, the Ministry of Finance banned the Russian government from repaying US dollar debt through Bank of America Corporation account.

Earlier this month, the US Treasury refused to grant sanctions exemption to agency banks after Russia paid $650 million in rubles for principal and interest on European bonds that were required to be paid in dollars. At the same time, international credit ratings Standard & Poor's and Moody's Corporation said that if bondholders do not receive remittances within the 30-day grace period after April 4, they will constitute a default.

Now people are starting to think about the next step: how can bondholders recover the loan.Tatiana Orlova, chief economist for emerging markets at the Oxford School of Economics, said investors faced a "long and difficult" legal road, according to Business insider. She wrote in a report sent to clients on Thursday:

Russia's debt crisis will be one of the most difficult to solve in history, because default is rooted in politics, not finance.

One of the key issues is that the political and financial relations between Russia and the West have completely broken down.This makes the usual default procedure, in which the holder and the government negotiate and finalize the deal, seem unlikely.

The second key issue is that Ukraine may file a claim against Russia in the International Court of Justice.It is required to pay for the reconstruction of the country. In this case, investors will have to weigh whether to "compete" with the Ukrainian government for Russian assets.

Earlier this year, U.S. president Joe Biden ordered the freezing of half (nearly $9.5 billion) of the assets of the Afghan Central Bank as compensation for the victims of 9 / 11 and providing humanitarian assistance to the country. and is trying to prevent the Taliban from getting money from the United States in any way.

Similarly, the US may end up grabbing money from Russia's central bank's foreign exchange reserves, in other words, frozen funds are owned by the US.Orlova pointed out:

The US government may find a stronger moral reason to transfer the dollar-denominated portion of Russia's foreign exchange reserves to Ukraine and bondholders.

So far, Western governments have frozen most of Russia's $600 billion in reserves.

Russian Finance Minister Silouanov said earlier that the government had fulfilled its obligations through payment in rubles.Western governments are forcing Russia to default and warn of legal action.

It is not just holders of Russian sovereign debt who may have to go to court to get their money back. Orlova also pointed out in the report:

In view of the tough position taken by the United States, Bank of America Corporation is prohibited from processing payment.Russian corporate debt "avalanche" default may attack!

Last week, Russian Railways JSC, the Russian railway company, was ruled as a credit default by the Credit Derivatives decision Committee (CDS) after failing to pay interest due to sanctions, the first default since Russia was subject to financial sanctions.

According to JPMorgan Chase & Co,Since the beginning of the conflict in February, Russian companies have about $98 billion in outstanding bonds.Of which $21.3 billion is held by foreign investors.