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The repudiation of debt at the Russian revolution was the 1918 rejection of all sovereign debt and other financial obligations by the Bolshevik government upon attaining power.
In February 1918, after the Russian Revolution, the repudiation of the debt by the Soviet government shocked international finance and triggered unanimous condemnation by the governments of the great powers. The British, and especially the French, had lost millions of pounds of foreign investment in Russia.
Revolutionary Russia completely fell out of the world economy and sealed itself up in isolation, which would not be disturbed until the hostilities with other nations during the Second World War. [1]
In the early 19th century, the Russian Empire turned to the public capital markets and, especially, foreign markets and foreign intermediaries, to regulate and stimulate the growth of its economy, financing its ambition and its development. The transformation from a feudal to a capitalist system proceeded little by little and required foreign investment. Until then, the Russian economy was mainly dominated by agricultural and local production and thus did not stimulate the creation of a national marketplace. Borrowing by the Russian government was important for both European and Russian domestic financial markets. It was the government's need to finance its budget deficit that stimulated the progress of the Russian financial system.[ citation needed ]
In 1913, foreign investors held 49.7% of Russian government debt and owned nearly 100% of all petroleum fields, 90% of mines, 50% of chemicals and 40% of metallurgical industries. This amounted to the largest foreign debt in the world at the time. France was the major lender to Russia and French investors financed the creation of iron and steel industries and mining operations. In 1914, 80% of the Russian government debt was held in France and 14% in Great Britain. [2]
Russia entered World War I in July 1914. Germany, France, Great Britain and Tsarist Russia had been preparing for war for a long time. Military spending was enormous and financially catastrophic for the Russian government.[ citation needed ]
Between the beginning of the war and Bolsheviks’ accession to power, the debt soared to £3,385 million, about 3.5 times what it had been. Furthermore, the First World War caused 3,300,000 deaths in Russia between 1914 and February 1917: 1,800,000 soldiers and 1,500,000 civilians. Thus, the burden of the war finally caused a complete collapse of the economy and a change in the political system.[ citation needed ]
On February 17, 1917, the Tsar Nicholas II, the last Emperor of Russia, was forced to sign his abdication and the end of the Russian Imperial Government and of the Romanov dynasty. The new provisional government decided to continue the war, which meant more military spending. To increase budget revenues, a state monopoly was introduced on the sales of sugar, tea, matches, tobacco, and other consumer products. Still, the printing press remained the main source of revenues. This was a period of hyperinflation.[ citation needed ]
Bolshevik revolutionaries overthrew the government on October 24, 1917, subsequently creating the Soviet government. The amounts of payments in default were enormous. [3] Russian debt to Great Britain alone at the end of World War I was estimated at between 538 and 568 million pounds. The amount of debt to France was estimated at 3,573 million francs and Russian foreign debt to Japan equaled 147 million dollars.[ citation needed ]
On February 8, 1918, the Soviet government repudiated all bonds issued by the Tsarist government when the Soviet of People's Commissars of the Russian Soviet Federative Socialist Republic (RSFSR) cancelled all previously issued Russian government debt. It stopped payment on foreign debt at the beginning of 1918 and declared that all debts contracted by the Russian Empire were cancelled, as well as the debts contracted by the Russian Provisional Government, so that the war could be continued from February to November 1917.[ citation needed ]
At the same time, the Soviets decided to expropriate all assets of foreign nations in Russia. The Soviets also nationalized banks, lands, and industries. By repudiating the external debt, the Soviet government implemented the Petrograd Soviet’s decision of 1905. [4]
The cancellation of the foreign debt by Soviet Russia stunned international finance and triggered universal denunciation by the allied powers. [5] Western governments were convinced that they should openly support the anti-Bolshevik forces to restore a capitalist order.
Some debtors called for an intensification of the Allied intervention in the Russian Civil War.[ citation needed ]
Even in 1924, after the Russian Civil War was over, The Investor's Monthly Manual in London published quotes for Russian bonds.[ citation needed ]
In 1986, the Soviet government settled a foreign compensation debt with the United Kingdom from the slavic sovereign default looming in 1917. [6]
After the dissolution of the Soviet Union in 1991, the newly formed Russian Federation had to not only come up with a new financial strategy for its future, but also had to consider repaying the billions of dollars the Soviet Union borrowed from abroad.[ citation needed ] In 1996, Paris and Moscow signed an accord for Russia to repay a nominal value of between $80 and $100 for each of the 4 million czarist bonds believed to remain in circulation in France, for a total payout of around $400 million. [7] Russia paid but not nearly as generously as the descendants of French bond buyers hoped. [8]
By August 21, 2006, all the Soviet era debts to the west are considered to have been paid off by Russian Federation. [9] Following August 21, 2017, the last remaining Soviet Union foreign debt has been repaid, concluding all the Soviet Union legacy debts being repaid in full by Russian Federation. [10]
The October Revolution, also known as the Great October Socialist Revolution, October coup, Bolshevik coup, or Bolshevik revolution, was a revolution in Russia led by the Bolshevik Party of Vladimir Lenin that was a key moment in the larger Russian Revolution of 1917–1923. It was the second revolutionary change of government in Russia in 1917. It took place through an insurrection in Petrograd on 7 November 1917 [O.S. 25 October]. It was the precipitating event of the Russian Civil War. The initial stage of the October Revolution which involved the assault on Petrograd occurred largely without any human casualties.
The Russian Civil War was a multi-party civil war in the former Russian Empire sparked by the overthrowing of the liberal-democratic Russian Provisional Government in the October Revolution, as many factions vied to determine Russia's political future. It resulted in the formation of the Russian Socialist Federative Soviet Republic and later the Soviet Union in most of its territory. Its finale marked the end of the Russian Revolution, which was one of the key events of the 20th century.
The Treaty of Brest-Litovsk was a separate peace treaty signed on 3 March 1918 between Soviet Russia and the Central Powers, by which Russia withdrew from World War I. The treaty, which followed months of negotiations after the armistice on the Eastern Front in December 1917, was signed at Brest-Litovsk.
Following their defeat in World War I, the Central Powers agreed to pay war reparations to the Allied Powers. Each defeated power was required to make payments in either cash or kind. Because of the financial situation in Austria, Hungary, and Turkey after the war, few to no reparations were paid and the requirements for reparations were cancelled. Bulgaria, having paid only a fraction of what was required, saw its reparation figure reduced and then cancelled. Historians have recognized the German requirement to pay reparations as the "chief battleground of the post-war era" and "the focus of the power struggle between France and Germany over whether the Versailles Treaty was to be enforced or revised."
War reparations are compensation payments made after a war by one side to the other. They are intended to cover damage or injury inflicted during a war. War reparations can take the form of hard currency, precious metals, natural resources, industrial assets, or intellectual properties. Loss of territory in a peace settlement is usually considered to be distinct from war reparations.
After the Russian Revolution, in which the Bolsheviks took over parts of the collapsing Russian Empire in 1918, they faced enormous odds against the German Empire and eventually negotiated terms to pull out of World War I. They then went to war against the White movement, pro-independence movements, rebellious peasants, former supporters, anarchists and foreign interventionists in the bitter civil war. They set up the Soviet Union in 1922 with Vladimir Lenin in charge. At first, it was treated as an unrecognized pariah state because of its repudiating of tsarist debts and threats to destroy capitalism at home and around the world. By 1922, Moscow had repudiated the goal of world revolution, and sought diplomatic recognition and friendly trade relations with the capitalist world, starting with Britain and Germany. Finally, in 1933, the United States gave recognition. Trade and technical help from Germany and the United States arrived in the late 1920s. After Lenin died in 1924, Joseph Stalin, became leader. He transformed the country in the 1930s into an industrial and military power. It strongly opposed Nazi Germany until August 1939, when it suddenly came to friendly terms with Berlin in the Molotov–Ribbentrop Pact. Moscow and Berlin by agreement invaded and partitioned Poland and the Baltic States. Stalin ignored repeated warnings that Hitler planned to invade. He was caught by surprise in June 1941 when Nazi Germany invaded the Soviet Union. The Soviet forces nearly collapsed as the Germans reached the outskirts of Leningrad and Moscow. However, the Soviet Union proved strong enough to defeat Nazi Germany, with help from its key World War II allies, Britain and the United States. The Soviet army occupied most of Eastern Europe and increasingly controlled the governments.
Volodymyr Kyrylovych Vynnychenko was a Ukrainian statesman, political activist, writer, playwright and artist who served as the first prime minister of the Ukrainian People's Republic.
William Christian Bullitt Jr. was an American diplomat, journalist, and novelist. He is known for his special mission to negotiate with Lenin on behalf of the Paris Peace Conference, often recalled as a missed opportunity to normalize relations with the Bolsheviks. He was also the first U.S. ambassador to the Soviet Union and the U.S. ambassador to France during World War II. In his youth, he was considered a radical, but he later became an outspoken anticommunist.
The Economic and Financial Conference was a formal conclave of representatives from 34 European countries held in the ancient Palazzo San Giorgio of Genoa, Italy, from 10 April to 19 May 1922.
The Lausanne Conference of 1932, held from 16 June to 9 July 1932 in Lausanne, Switzerland, was a meeting of representatives from the United Kingdom, France, Italy, Belgium, Japan and Germany that resulted in an agreement to lower Germany's World War I reparations obligations as imposed by the Treaty of Versailles and the 1929 Young Plan. The reduction of approximately 90 per cent was made as a result of the difficult economic circumstances during the Great Depression. The Lausanne Treaty never came into effect because it was dependent on an agreement with the United States on the repayment of the loans it had made to the Allied powers during World War I, and that agreement was never reached. The Lausanne Conference marked the de facto end of Germany's reparations payments until after World War II.
The Soviet–Lithuanian Peace Treaty, also known as the Moscow Peace Treaty, was signed between Lithuania and Soviet Russia on July 12, 1920. In exchange for Lithuania's neutrality and permission to move its troops in the territory that was recognised during its war against Poland, Soviet Russia recognized the sovereignty of Lithuania. The treaty was a major milestone in Lithuania's struggle for international recognition and recognised Lithuania's eastern borders. Interwar Lithuania officially maintained that its de jure borders were those delineated by the treaty although a large territory, the Vilnius Region, was actually controlled by Poland.
Chile–Russia relations are the bilateral foreign relations between Chile and Russia. The establishment of diplomatic relations between Chile and the USSR countries happened on December 11, 1944.
Hyperinflation affected the German Papiermark, the currency of the Weimar Republic, between 1921 and 1923, primarily in 1923. The German currency had seen significant inflation during the First World War due to the way in which the German government funded its war effort through borrowing, with debts of 156 billion marks by 1918. This national debt was substantially increased by 50 billion marks of reparations payable in cash and in-kind under the May 1921 London Schedule of Payments agreed after the Versailles treaty.
A sovereign default is the failure or refusal of the government of a sovereign state to pay back its debt in full when due. Cessation of due payments may either be accompanied by that government's formal declaration that it will not pay its debts (repudiation), or it may be unannounced. A credit rating agency will take into account in its gradings capital, interest, extraneous and procedural defaults, and failures to abide by the terms of bonds or other debt instruments.
World War Foreign Debts Commission Act is a United States statute authorized February 9, 1922 endorsing a commission, working under Secretary of the Treasury Andrew Mellon, to negotiate repayment agreements with Great Britain and France in the aftermath of World War I.
Merle Fainsod was an American political scientist best known for his work on public administration and as a scholar of the Soviet Union. His books Smolensk under Soviet Rule, based on documents captured by the German Army during World War II, and How Russia is Ruled helped form the basis of American study of the Soviet Union, and established him "as a leading political scientist of the Soviet Union." Fainsod is also remembered for his work in the Office of Price Administration and as the director of the Harvard University Library.
The Ukrainian People's Republic (UPR) was a short-lived state in Eastern Europe. Prior to its proclamation, the Central Council of Ukraine was elected in March 1917 as a result of the February Revolution, and in June, it declared Ukrainian autonomy within Russia. Its autonomy was later recognized by the Russian Provisional Government. Following the October Revolution, the Central Council of Ukraine denounced the Bolshevik seizure of power and proclaimed the Ukrainian People's Republic with a territory including the area of approximately eight Russian imperial governorates. It formally declared its independence from Russia on 22 January 1918.
International relations (1919–1939) covers the main interactions shaping world history in this era, known as the interwar period, with emphasis on diplomacy and economic relations. The coverage here follows the diplomatic history of World War I and precedes the diplomatic history of World War II. The important stages of interwar diplomacy and international relations included resolutions of wartime issues, such as reparations owed by Germany and boundaries; American involvement in European finances and disarmament projects; the expectations and failures of the League of Nations; the relationships of the new countries to the old; the distrustful relations between the Soviet Union and the capitalist world; peace and disarmament efforts; responses to the Great Depression starting in 1929; the collapse of world trade; the collapse of democratic regimes one by one; the growth of economic autarky; Japanese aggressiveness toward China; fascist diplomacy, including the aggressive moves by Fascist Italy and Nazi Germany; the Spanish Civil War; the appeasement of Germany's expansionist moves toward the Rhineland, Austria, and Czechoslovakia, and the last, desperate stages of rearmament as another world war increasingly loomed.
Soviet Middle Eastern foreign policy during the Cold War was shaped by two primary concerns, as perceived by the Soviet leadership. The first key priority was ensuring the security interests of the Soviet Union itself, mainly by countering American presence in the region, with the second concern revolving around the ideological struggle between communism and capitalism. During the Cold War, the USSR first started to maintain a proactive foreign policy in the Middle East as a whole in the mid-1950s. The rise of Arab Nationalism, which was a highly anti-Western movement, enabled the Soviet Union to form alliances with various Arab leaders, a notable example being Gamal Abdel Nasser of Egypt. In order to sustain its sphere of influence in the region, the USSR provided military and economic assistance to pro-Soviet states and exploited regional conflicts and rivalries, such as between Arab states and Israel, to its advantage. The collapse of the Soviet Union in 1991 would result in a power vacuum in the Middle East and contributed to the rise of American hegemony in the region.
The People's Commissariat for Foreign Affairs of the Russian SFSR was the central executive state body of the Russian Soviet Federative Socialist Republic responsible for conducting the foreign policy and foreign relations of the Soviet state in 1917-1923 and in 1944–1946.