Will the Ukraine Conflict Lead Russia To Dump Some of Their US Debt Holdings?
The situation in the Ukraine continues to develop on a daily basis, with Russian President Vladimir Putin recently signing a decree that recognizes the independence and sovereignty of the Republic of Crimea. This comes after a weekend referendum in which a full 97% of Crimean voters voted to join Russia. The referendum was denounced by the European Union and the United States as being against international law.
In retaliation, the United States and European Union announced sanctions against various Russian government officials and Crimean separatist leaders. These sanctions include travel bans and asset freezes.
Prior to the sanctions, many Russian entities (companies, etc) pulled billions of dollars out of the Western banking system for fear of asset freezes and other economic sanctions. According to reports, the money continues to flow out of the system.
Next up? The Russian parliament will vote on whether or not to annex the Crimea region. If this happens, the crisis will be escalated even further. Interim Ukrainian President Oleksandr Turchynov has stated that the Ukraine will not accept the annexation of Crimea. Turchynov also announced the partial mobilization of Ukraine's armed forces. Russia has reportedly been massing troops on the border of the Ukraine for the past couple of weeks.
If Russia does annex the Crimea region, the United States and EU are expected to announce further economic sanctions. President Obama has said that "further provocations will achieve nothing except to further isolate Russia and diminish its place in the world."
It's worth noting that Russia owned $138.6 billion of US debt as of December/2013. Russia's debt holdings were down 0.93% compared to November and 14.18% from the year before.
Russia is currently the 12th largest foreign holder of US debt:
China - $1.2689 trillion
Japan - $1.1825 trillion
Caribbean Banking Centers - $290.9 billion
Belgium - $256.8 billion
Brazil - $245.5 billion
Oil Exporters - $238.3 billion
All Others - $208.0 billion
Taiwan - $182.2 billion
Switzerland - $175.1 billion
United Kingdom - $163.6 billion
Hong Kong - $158.8 billion
Russia - $138.6 billion
While Russia is certainly down the list of the world's largest foreign holders of US debt, they still own a substantial amount. To be honest, the United States needs all of the help that they can get funding their deficit spending, and hostile relations with Russia will almost certainly result in Russia paring back their holdings significantly.
Source: List of Largest Foreign Holders of US Debt
Filed under: General Knowledge