Skip to content
The Editors

A Russian Default Won’t Win the War

If the US and its allies want to change the Kremlin’s calculations, they should focus on oil and gas.

Facts on the ground.

Facts on the ground.

Photographer: Christopher Furlong/Getty Images

President Joe Biden recently tightened financial sanctions on Russia another notch, pushing it closer to defaulting on its debts. A missed interest payment this week has triggered a significant insurance payout. Keeping up this pressure on President Vladimir Putin’s regime is justified — but it’s no game-changer. Russia’s main economic vulnerability remains its exports of oil and gas. That’s where the US and its allies need to keep their focus.

Russia has been working hard to maintain its debt payments, proving if nothing else that Putin regards default as a further blow to his credibility. His officials had been able to exploit a sanctions loophole that allowed the payments to be made, but the US has now closed this channel. Even creative alternatives, like allowing foreign creditors to open accounts in Russian banks in rubles and hard currency, appear unlikely to stave off the inevitable.