The Russian finance minister Alexei Kundrin announced that Russian would not honor its Paris Club debt. It was not allocated in this years budget. Why?... Why was the government so happy to restructure the London Club debt? The London Club was owned $32 billion before restructuring, it increased to $41 billion afterward. This dramatic increase is one of many ways in which insiders at the Kremlin, with advanced knowledge, were able to make billions.

  Debts racked up by Soviet foreign-trade organizations are similar to London CLub debt. These organizations were set up during the late 1960's by the KGB to finance Soviet-backed insurgencies and governments in third-world countries. By the 1970's they were mostly used to launder money abroad for Party insiders. By the 1980's they were laundering money for the KGB leadershi itself and in the 1990's their debts were resold, goodness knows where, through a network of offshore companies.

  There has been much speculation that those companies were controlled bt the government officials who were negotiating the restructuring of those debts. All that is known for certain is that in 1994 these debts stood at $5 billion and now, after resale and restructuring, they amount to more than twice that, according to finance minister Kundrin.

  The government promised to pay off the debts for the company building the High-Speed railway between Moscow and St. Petersburg. Its bonds were selling for kopeks, and people knew it had no hope of paying off its debt. S0 insiders, with wind of the impending descision, made large sums of money. .
  In addition, Prime Minister Kasyanov has promised to pay $16 billion the government owes to the military-industrial complex. These debts were never included in the budget, they were incured when these factories-without state orders- simply produced aircraft or tanks and then presented the government with a bill.
  By now you've guessed that these hopless debts too could at one time be cheaply bought up and that the state's descision to pay brought hefty profits to those who did so.   

So why is thee government ready to pay off debts that it never incurred, but not the legimitate Paris Club debt? London Club debt and others mentioned, trade freely on debt markets. These bonds can easily be transformed into hard cash in the pockets of government insiders. But the Paris Clud cannot.

  These are the only debts that Russia's corrupt politicians do not owe to themselves. Or, rather to 'their' banks, companies, offshore firms. These debts are owed to Western governments and are not tradable on the open market. From the point of view of the Russian bureaucrats, that means that there is absolutely no reason to pay them!.