14:24 27.07.2016

Finance Ministry says Ukraine raised $3 bln loan from Russia under pressure

2 min read
Finance Ministry says Ukraine raised $3 bln loan from Russia under pressure

Ukraine's Finance Ministry has again said that Kyiv was forced to raise the $3 billion loan from Russia during the presidency of Viktor Yanukovych in 2013 under pressure, Finance Minister of Ukraine Oleksandr Danyliuk.

"There (in the High Court of Justice in England) our position is stated clearly: this was a political loan which we were forced to take...," he said on the air of Espresso.TV on Tuesday evening.

Danyliuk also recalled that Ukraine repeatedly offered Russia to restructure the debt on the same terms as other creditors, but the latter refused.

As reported, on May 27, 2016, Ukraine filed a lawsuit in the High Court of Justice in England against claim brought by Russia against Ukraine after the country defaulted on $3 billion in bonds issued in 2013.

Ukraine's defense arguments are divided in four groups.

The first says that the decision to release $3 billion eurobonds in 2013, eventually bought by Russia using funds from the National Welfare Fund (NWF), was taken in violation of Ukrainian legislation and Ukrainian regulatory procedures.

It says some decisions on the loan were taken out of their proper (legal) sequence. Ukraine notes other violations of procedure, arguing the decision to borrow was not made in line with Ukrainian legislation.

The second set of arguments says the deal is invalid because the loan was procured through duress created by Russia during 2013.

The document gives examples of duress after Ukraine initialed the Ukraine-EU Association Agreement in March 2012.

Ukraine also provides evidence of Russia's military interference in Crimea, culminating in the annexation of the Black Sea peninsula in March 2014.

Russian steps aimed at destabilizing the situation in eastern Ukraine are listed separately.

The third set of arguments deals with implied terms for the eurobond issue. Ukraine says the eurobond loan document implied that Russia would exert pressure on Ukraine. The implication was misleading and Ukraine cannot stick to the terms and conditions outlined in the document.

The fourth set of arguments is based on a concept of counter-measures involving international public law. Ukraine claims Russia does not observe its international and legal liabilities to Ukraine, which has the right to take counter-measures, including the suspension of its liabilities under the loan agreement.

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