This is more of a “losing face” moment, than an actual real financial crisis for Russia. They’re already in the middle of one of those.

While the international media has lost interest in the Russian invasion of Ukraine, rest assured that it is still ongoing. In fact, it got escalated over the weekend as Russia began shelling Kyiv directly again.

Russian missiles struck a residential building and the compound of a kindergarten in central Kyiv on Sunday, killing one person and wounding six more, officials said, as Moscow stepped up its air strikes on Ukraine for a second day.”

Firefighters put out a fire in a badly damaged nine-storey residential building in the central Shevchenkivskiy district, the emergency services said. Debris was strewn over parked cars outside a smouldering building with a crater in its roof.”

“They (rescuers) have pulled out a seven-year-old girl. She is alive. Now they’re trying to rescue her mother,” Kyiv’s mayor Vitali Klitschko said.”

“There are people under the rubble,” Klitschko said on the Telegram messaging app. He added that several people had been hospitalised.”

And even as Russia does seem to be making a fairly significant push back into actively taking on Ukraine, instead of digging in deeper in the east, there are signs that the Russian military is not in the best of shape. And I *ahem* mean that literally.

The #Russian pilot captured earlier this month by #Ukraine turned out to be an older retiree, and now we have Maj.-Gen. Pavel, 67, a large character, a veteran of the Soviet war on Afghanistan, who will oversee a special forces unit in the east. pic.twitter.com/tAq9xfJP7o

— Kyle Orton (@KyleWOrton) June 26, 2022

We already knew that Russia had done away with their age limits for enlistment, but they still have not gone for complete mobilization (because that would require actually declaring war on Ukraine, instead of calling this a “special military operation” and being able to tiptoe around what they have actually been doing). Russia knows that they have lost the media war, but they still very well could win the ground war simply by attrition. Joe Biden, for his part, tried to keep the G7 countries focused on what is still going on in Ukraine.

Biden condemned Russia’s actions as “more of their barbarism,” and stressed that allies need to remain firm even as the economic reverberations from the war take a toll around the globe in inflation, food shortages and more.”

“We have to stay together, because Putin has been counting on, from the beginning, that somehow NATO and the G-7 would splinter, but we haven’t and we’re not going to,” Biden said during a meeting with German Chancellor Olaf Scholz, who holds the G-7′s rotating presidency and is hosting the gathering.”

And that’s all very nice, especially considering that Ukraine is pretty much the only issue that hasn’t completely gone underwater for Joe Biden, unlike his regular poll numbers. The problem is, of course, is that Russia has been the oil supplier for Europe, especially for Germany, and despite their committments to an embargo, they are finding that it is very, very, VERY hard to turn off that spigot. Russia, therefore, claims that it has the money to meet their debt payments – they are just blocked from paying those debts in rubles due to the economic sanctions in place, thanks to the Treasury Department allowing a license to expire that allowed them to use American banks to pay their debt holders.

That move by the Treasury Department in May was seen as the first step toward default, because unless Russia could scrape up the cash in another way, they would be unable to make the payment. Well, their thirty day grace period is now up, and Russia has officially defaulted on a foreign debt payment for the first time since 1918.

For months, the country found paths around the penalties imposed after the Kremlin’s invasion of Ukraine. But at the end of the day on Sunday, the grace period on about $100 million of snared interest payments due May 27 expired, a deadline considered an event of default if missed.”

It’s a grim marker in the country’s rapid transformation into an economic, financial and political outcast. The nation’s eurobonds have traded at distressed levels since the start of March, the central bank’s foreign reserves remain frozen, and the biggest banks are severed from the global financial system.”

But given the damage already done to the economy and markets, the default is also mostly symbolic for now, and matters little to Russians dealing with double-digit inflation and the worst economic contraction in years.”

The average Russian is not going to care about a foreign debt default, but the government absolutely does, and isn’t shy about complaining about it.

The Kremlin now appears to have accepted this inevitability too, decreeing on 23 June stating that all future debt payments would be made in roubles through a Russian bank, the National Settlements Depository, even when contracts state they should be in dollars or other international currencies.”

Finance Minister Anton Siluanov admitted foreign investors would “not be able to receive” the payments, according to the RIA Novosti news agency.”

This was for two reasons, he said. “The first is that foreign infrastructure – correspondent banks, settlement and clearing systems, depositories – are prohibited from conducting any operations related to Russia. The second is that foreign investors are expressly prohibited from receiving payments from us.”

Because Russia wants to pay and has plenty of money to do it, he denied that this amounts to a genuine default, which usually occur when governments refuse to pay, or their economies are so weak that they cannot find the money.”

“Everyone in the know understands that this is not a default at all,” RIA Novosti quoted him. “This whole situation looks like a farce.”

Though default is a symbolic blow, it will have few immediate practical consequences for Russia.”

Defaulting nations usually find it impossible to borrow any more money, but Russia is already effectively barred from borrowing in Western markets by sanctions.”

In any case, it is reportedly earning around a billion dollars a day from fossil fuel exports, and Mr Siluanov said in April the country had no plans to borrow more.”

So yes, this is a blow to the Russian ego, but not the Russian checkbook. Their oil is still being bought up, mostly by India and China, and that isn’t going to stop anytime soon. And neither will the invasion in Ukraine. Ukraine may have won hearts and minds internationally, but they could still very much lose. And despite rumors of Putin’s health decline, it seems like the entire situation is a stalemate in a war of attrition. So despite the G7 countries wanting to stick together and help Ukraine, there doesn’t seem to be much else that they are willing to do except provide lip service.

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