Litigation could be the next step for Russia and Ukraine soon if the two countries do not reach settlement on the multi-billion debt that Ukraine owes to Russia. The rift between two countries is expected to bring larger effects to both economies.
According to Bloomberg Business, Ukrain Prime Minister Arseniy Yatsenyuk has imposed a moratorium on their $3 Billion loan to Russia which was made on December of 2013 a few weeks before the former President Viktor Yanukovych was toppled.
Russia previously stated that they will wait for the new year and the 10-day grace period to end before they pursue on a case against the other party. Ukraine ordered to halt the payment because of Russia's refusal to restructure the debt, as the latter claimed that the debt was sovereign and was owed by a central government.
A negotiation could be reached between Ukraine and Russia in order to keep it from reaching the court, but as reported by Voice of America, Yevgeny Minchenko, the president of Moscow's International Institute for Political Expertise suggest that politics is also at play in the issue.
"(Ukrainian) President (Petro) Poroshenko does not have a straight majority in the parliament and there are a lot of radicals in Ukrainian politics and (the) Ukrainian parliament as well. And, they would not understand and would not appreciate if Poroshenko would decide to give to Russia money back.", he said.
Aside from their moratorium on their billion dollar debt, the issue is also expected to affect the $507 million that two Ukraine state-run companies owe to Russian banks. In a report by The Global Legal Post, Prime Minister Yatsenyuk also stated that the the court proceedings on the matter will be added to the claims on Russia's annexation of Crimea and the issue of them backing on the separatist uprising in the Eastern Ukaraine.
The issue would also affect the economy of both nations as Ukraine participated to the Ukraine-EU trade agreement which is due to be implemented soon. The new agreement became basis for Russia to suspend their free trade zone with Ukraine, which would mean an increase in tariffs by 7 percent as well as food embargo.
