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Retirely in The things you own end up owning you,

Ukraine defaults on a $3 billion bond to Russia. Yes, someone approved a loan to the Ukraine and actually expected to be repaid

Ukraine said it won’t repay $3 billion in bonds due to Russia, moving a step closer to a court battle amid a new wave of economic tension between the two ex-Soviet neighbors.

Yatsenyuk announced the payment freeze at a government meeting in Kiev, contending the step was needed after Russia refused to join the restructuring. Payments are frozen “until our proposals on restructuring are accepted or until a relevant court decision is made,” he said. President Petro Poroshenko described the Russian bond as a “bribe” earlier this year, rejecting Putin’s demands for repayment.

“Our Ukrainian colleagues have no chance of winning this case,” Russian Deputy Finance Minister Sergey Storchak told state television on Friday.

The default is because Ukraine was required to restructure its debt with its private lenders as per IMF bailout agreement. The restructuring agreement was basically written to prevent holdouts (like Russia, who refused to participate in restructuring talks) to torpedo the deal. So, the restructuring agreement was written so that there is no cross-default if Ukraine defaults to Russia and also limits any recovery that Russia might get if it takes the Ukraine to court.

Even if Russia wins, its ability to recover on any of that money is pretty limited. They’re pretty much limited to seizing Ukranian assets in Russia.

Frankly, if I’m not mistaken, a lot of the Russian bonds were basically there to enrich Victor Yanukovych, the ousted Pro-Kremlin Ukrainian leader. Basically, what Russia would do is buy Ukranian bonds. Yanukovych would pocket the money personally or structure the money to go to one of his oligarch cronies. Then, have Ukraine repay Russia for the bond, while Yanukovych and Russia reaps the benefits. In that sense, screw the Russians, since they were clearly intending to screw Ukraine.

IMF rules do not allow it to lend to countries at war or countries where it is doubtful repayment will happen.

But as Dick Cheney said, rules don’t apply when it comes to what the US wants.