"Such a blockage is not a default and the financial world knows it very well. Russia is, of course, willing to pay. It is fundamentally illegal and the bond holders around the world that are hit by this 'sanction' imposed by the US and the Europeans could and should file a complaint in international courts," he said.
The Paris-based financial expert suggested they would have a strong case for winning but the legal battle would probably take 5 to 10 years.
Gave said he was confident that Russia had ample cash to pay. Until now, the Russian central bank has always found a way to bypass Western financial curbs to pay to foreign bond holders but in this instance, he said, it seems Russia tried to pay in rubles but the bonds in question do not allow payments in other currencies than the dollar.
"The Russian currency is at its strongest level against the dollar since May 2015... So the value of the ruble is not in question. What is in question is the Western financial sanctions that will have heavy repercussions for the West too," the economist predicted.
Blockage of Russian Bond Payments to Erode Dollar Dominance
The freeze of Russian payments on Eurobonds by Washington and European capitals may lead to the dollar losing its dominance in international transactions, Gave added.
"The main result will be a reluctance around the world to use the dollar as the currency for international exchanges. It will be the same for the euro."
The financial expert said that the blockage was intended to warn off the financial world from doing business with Russia but it merely showed that domestic currencies were a safer means of transactions.
“If major deals will be struck tomorrow between Taiwan and Korea, it will not be in dollars anymore, but in one of their national currencies. The result will be the end of the dominance of the US dollar," Gave said.
"As for Russia, it will redirect its international bond issuance via Chinese banks in Shanghai, Beijing or other places around the world. This will, above all, be detrimental for the US and European financial markets," he suggested.
Sanctions imposed on Russia since February have had a very limited effect on its economy and have boomeranged home to hit Europe. Gave suggested that the continent was heading for a huge economic crisis this fall, with a possible return to the stagflation of the 1970s.
“The Western sanctions are already being the boomerang that could be feared: if Russia stops altogether to deliver gas to Europe, the economic crisis in Europe this fall will be huge. We paid our energy in euros to Russia? We’ll now pay it in dollars to Qatar or the US," he said.
US news agencies have labeled it Russia's first default on external debt since 1918. Russia has argued that it not a genuine default since it can and is willing to pay and accused international financial institutions of blocking payment transactions. The Finance Ministry has also stressed that payments have been made in full and in accordance with the terms under which the eurobonds were issued.