File photo: Xinhua

With the final deadline on a pair of Russia's overdue interest payments totaling about $100 million passed on Sunday night, Western media outlets declared that since bondholders had not yet received the payments, Russia is set for its first major foreign debt default in over a century.

What must be pointed out, however, is that the reason why international creditors could not receive the payments is not because Russia was unable or unwilling to pay its debts, but because Western sanctions have made it impossible for Russia to get the payment to investors. Russia argued that it already fulfilled all obligations when it sent the funds to Russia's National Settlement Depository, which was then transferred to Euroclear Bank and has been stuck there, Bloomberg reported on June 8. 

Over the past several months, the Kremlin has repeatedly accused the US and its Western allies of trying to force Russia into an artificial default, which observers believe is aimed at completely isolating Russia from the international financial market and crushing the Russian economy.

With its vast oil and gas revenues and merely about $40 billion in foreign liabilities, Russia certainly cannot accept the default designation from the West. Despite the hurdles erected by Western governments, Russia is still trying to fulfill its debt obligations. Under a decree signed by Russian President Vladimir Putin on Wednesday, the country's finance ministry is reportedly transitioning to the procedure of paying rubles on its foreign bonds.

Russia's response actually offers a feasible alternative for foreign investors caught up in Western sanctions. For starters, the Russian ruble has continued to rise against the dollar in recent days, which jumped to a seven-year high against the dollar and the euro last week. So converting the ruble to other currencies is not a big problem in international markets. Second, accept the ruble payment means that investors don't have to go through lengthy legal procedures to recover their investment losses.

While the economic war between the US-led West and Russia continues to escalate and many uncertainties remain, one thing has become crystal clear: the Western unilateral sanctions against Russia is not only ineffective in pressuring Moscow, but can actually inflict massive losses on global investors. The sanctions are also exacerbating already-high global inflation, with consumers and businesses in the West bearing the brunt of their governments' policies. 

Unfortunately, fresh signs indicate that the US and its allies are looking to double down on their toxic policies. At the ongoing summit in Germany, leaders of the G7 countries are preparing new sanctions against Russia's technology and defense sectors, according some media reports. US President Joe Biden has also reportedly said that the G7 will ban Russian gold imports. There are also calls in the West to confiscate the frozen reserves of the Bank of Russia. 

Currently, Russia has more than $600 billion of gold and forex reserves frozen overseas. If the US and its Western allies seized the reserves, it would be far more serious than the artificial bond default and could further escalate the economic war between the West and Russia with even greater global implications. If the US and its allies move to seize Russian assets, Moscow would almost definitely fight back, and an all-out economic battle between the West and Russia would lead to serious damages to global financial markets and supply chains. 

Given such a bleak prospect, the US and its allies are advised to be careful about what they plan to do next. It is now crystal clear that their sanctions cannot end the conflict, and Western economies as well as the global economy as a whole cannot afford more reckless sanctions from Western governments, especially given that their inept and irresponsible domestic economic policymaking has already inflicted pain on the global economy.