G-7 expected to adopt fresh sanctions against Russia

The Ukrainian president joined via video the G-7 leaders, who gathered for a summit in the Bavarian Alps. The group has been discussing the war in Ukraine, plans to adopt new sanctions against Moscow and an infrastructure project to challenge China (Photo: AFP)
The Ukrainian president joined via video the G-7 leaders, who gathered for a summit in the Bavarian Alps. The group has been discussing the war in Ukraine, plans to adopt new sanctions against Moscow and an infrastructure project to challenge China (Photo: AFP)

Summary

Move comes as the group discusses the situation in Ukraine with President Volodymyr Zelensky

TELFS-BUCHEN (AUSTRIA) : The Group of Seven leaders are expected to agree to start work on a mechanism to cap the purchase price of Russian oil, with the U.S. also announcing a new round of military aid for Ukraine and sanctions against Moscow, Biden administration officials said Monday.

Leaders will direct relevant ministers in their countries to work on the details of Russian oil caps, which would create a buyers’ cartel of Western nations and their allies, the official said. There is no timeline yet on when the details will be worked out. The issue was discussed by G-7 leaders on Sunday, the first day of their gathering in the Bavarian Alps.

“The goal here is to starve Russia, starve [Russian President Vladimir] Putin of his main source of cash and force down the price of Russian oil to help blunt the impact of Putin’s war at the pump," the official said.

Also Monday, Ukrainian President Volodymyr Zelenskyaddressed the leaders via video, calling on them to provide more air-defense capabilities and support over the next few months to shorten the duration of the war, White House national security adviser Jake Sullivan said.

The U.S. will announce it is providing Ukraine with an advanced medium- to long-range surface-to-air missile defense system for Ukraine, another senior administration official said. Other security assistance likely to be announced this week includes additional artillery ammunition and counter-battery radars to address needs expressed by the Ukrainian military.

Many G-7 nations have already moved to cut off imports of Russian oil to their own markets, and the European Union has approved a ban on insuring shipments of Russian oil. Because many shipments of oil are insured by companies in the EU and U.K., analysts and Treasury Secretary Janet Yellen have raised concerns that the insurance ban could block Russia’s ability to ship oil to other buyers like India and China.

To try to avoid further price spikes that taking Russian oil off the market could cause, officials have discussed creating a carve-out from the insurance ban to set the price cap. Under this idea, insurers and other financial-service providers could still cover shipments of Russian oil—if the sales price falls under the cap. Because of its complexity, U.S. and EU officials have been puzzling out some of the specifics of implementing the idea, including how to ensure that shipments comply with the price cap.

Mr. Sullivan said the delay in figuring out details of the price caps is because of the complexity of the issue.

“The single biggest factor here is this is not something that can be pulled off the shelf as a tried and true method," he said. “It is a new kind of concept to deal with a particularly novel challenge, which is how to effectively deal with a country that’s selling millions of barrels of oil a day."

Ms. Yellen has called for a price cap for weeks, and called several of her foreign counterparts in recent days to discuss setting a cap on Russian oil, according to a person familiar with the talks.

While higher prices for oil and gas have helped Russia weather sanctions, fresh evidence of pain came Monday with news that Moscow was poised to default on its foreign debt for the first time since 1918.

The new batch of sanctions expected to be agreed this week would target Russian individuals accused of war crimes and human-rights abuses, including those responsible for blocking Kyiv grain exports, the U.S. official said. Additional tariffs will be imposed on Russian goods.

New actions to be announced include blocking sanctions on major state-owned defense enterprises and research organizations to limit Russia from replenishing its weapons supply, the U.S. said. President Biden and G-7 leaders will also seek authority to use revenue from existing tariffs to help the people of Ukraine.

The U.S. will implement a higher tariff rate on more than 570 groups of Russian products worth approximately $2.3 billion to Russia in line with Congress revoking Russia’s trade status, according to a government fact sheet distributed Monday.

Further, the U.S. will impose blocking sanctions on private military companies operating in Ukraine and Russian military units “that have been credibly implicated in human rights abuses or violations of international humanitarian law in Ukraine," the document stated, as well as Russian officials, including mayors and ministers, installed in contested cities.

On Sunday, the group unveiled a ban on Russian gold imports and addressed competition with China in detailing a plan to invest hundreds of billions of dollars in infrastructure projects for developing countries.

 

Catch all the Politics News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
more

MINT SPECIALS

Switch to the Mint app for fast and personalized news - Get App