Russia is looking for money from 'friendly' nations to indirectly support its war in Ukraine, UK intel says

Russian President Vladimir Putin at a manufacturing company in Tula, Russia, April 4, 2023.

Sputnik/Ramil Sitdikov/Pool via REUTERS

• As it looks to its budget, Russia is gearing up to sell sovereign debt, UK intelligence said.
• Russia appears to be anticipating financial support from countries seen as "friendly," it said.
• As a result, foreign investors would be "indirectly financing Russia's invasion of Ukraine."

Russia is expecting financial support from countries it deems "friendly," with the money then being indirectly used to fund its ongoing invasion of Ukraine, according to UK intelligence.

In an intelligence update on Wednesday, the UK Ministry of Defence highlighted recent comments from Russian Prime Minister Mikhail Mishustin, where he said that a move to issuing some of Russia's sovereign debt in foreign currencies was "under development."

The MOD said that the move is "almost certainly an indication that Russia anticipates external financial support from foreign states it deems 'friendly.'"

Moscow's decision would allow investors from other countries to buy Russia's sovereign debt and finance some of Russia's future budget shortfalls.

"Such investors would be indirectly financing Russia's invasion of Ukraine," the MOD said.

The move would also blunt the impact of sanctions that many countries put in place after the invasion of Ukraine. Last June, Russia defaulted on its foreign debt for the first time since 1918.

But the country has continued to raise funds, including by selling oil to nations that are more supportive, or at least see the economic benefit of continuing relations. China and India, for example, now buy more Russian oil than they did before the war.

Over the last few months, Russian banks have been the main buyer of Russian state debt, the MOD said.

But it added that the banks are "unlikely to have the capacity to fully fund anticipated future budget deficits."

"Russian officials likely see external debt issuance as one way to plug gaps in Russia's finances as they plan for a long war in Ukraine," it said, while adding that it remains unclear whether Russia will succeed in implementing the measures.

The MOD did not name any countries that this financial support could come from.

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