I think I'm lovely (of course), but I suspect that harder heads will suggest that Russia's quick forgiveness reflects their size and strategic importance. The really interesting thing here is that the London Club crumbled so soon -- I seem to remember (Patrick Bond will know) that the private creditors typically wait for the Paris Club to settle, and then take the same deal.
The Paris Club is often harder than the LC, because it has a "comparable treatment" clause, which prevents a borrower from giving any other creditor a better deal than that which is given to the Paris Club (as the Germans are currently pointing out in relation to Russia, debtors can give non-PC creditors a worse deal, but not a better one). This effectively creates a creditors' cartel and gives the PC a degree of leverage. The London Club, since it has more members and less permanent resources, has nothing like the same amount of cartel power.
On the other hand, of course, the PC also has the huge carrot to offer of the "cut-off date" -- any money lent after a PC rescheduling is considered senior to previously existing debt. So once the PC agreement is in place, everyone rushes to lend. I reckon that Russia will be back in the market by the end of the year, crashes permitting.
nas drovje
dd
Am I wrong in thinking that Russia's agreement with the London Club is a vindication of Daniel Davies' argument last month that defaulting on investors, properly handled, will induce them to write off a major portion of your old debt? And that they will still let you back into the capital markets in a short time? It's also interesting that this agreement with private creditors seems to be putting pressure on governments that lent to Russia to be less hardass. (Is the Paris Club always more hardass than private creditors? I notice they seem to be plenty hardass on Nigeria these days as well.)
Michael __________________________________________________________________________ Michael Pollak................New York City..............mpollak at panix.com
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