A Russian default looms – part of the penalty Vladimir Putin is imposing on his own people

The impact probably won’t be as severe as the country’s financial crisis of 1998 but it will hurt Russia and its reputation, argues James Moore

Russians queue for currency as the country’s economic plight deteriorates (AP)

It isn’t only Vladimir Putin who had plenty of time to prepare his next move following his unlawful annexation of Crimea in 2014.

Western financial institutions did too. They might not have expected that this would eventually involve an invasion of Ukraine. But they saw the way the wind was blowing, even if the initial sanctions that were imposed were tepid, and they took steps to reduce their exposure to the country. In that respect, they were a good deal sharper than some western governments.

The looming Russian default is technically more serious than the one that occurred in 1998 under Boris Yeltsin – in that it looks set to involve debt denominated in foreign currency as well as in roubles. Attempting to pay coupons in the latter won’t wash with holders of bonds denominated in dollars or euros. It will be considered a default if this is the path down which the nation chooses to go.