TELFS, Austria – Leaders of the Group of 7 Nations said on Sunday they would stop buying gold from Moscow and discussed a new US proposal to undermine its oil revenues, even as Russian forces missile missiles for the first time in weeks in Kiev. The escalation of duel underscored how the war in Ukraine consumed global politics and the world economy.
President Biden and the British government have said members of Group 7 – Canada, France, Germany, Italy, Japan, Britain and the United States – will move on Tuesday to ban the import of Russian gold. Representatives of the composite countries were also negotiating an agreement to buy Russian oil only at a sharp discount.
US officials see both the gold import ban and the possible oil price restriction as ways to undermine key sources of revenue for Moscow’s war effort and further isolate it from the international financial system. Such pressure was a theme at the meeting, both in public and behind the scenes, as leaders sought to project solidarity with Ukraine. On Monday, Ukrainian President Volodymyr Zelensky will address the summit.
As the fighting in Ukraine approaches its fifth month, the leaders of the Group of 7 countries – the world’s richest major democracies – are trying to maintain unity against Russia in light of the war’s growing toll on the world economy. Western sanctions aimed at inflicting pain on Russia have sent food and energy prices soaring around the world, even though Moscow’s war machine has shown little sign of slowing down.
Russia appeared to be sending a message of resistance to G7 leaders on Sunday morning when it unleashed a new round of missiles at an apartment building in Kiev, killing at least one person. The top three floors of the nine-storey building was reported destroyed. Rescue workers were able to pull a 7-year-old girl out of the rubble, but her father was killed and her mother, a Russian citizen, was injured, authorities said.
Russia also stepped up its use of cruise missiles over the weekend, launching dozens of attacks on targets across the country. In addition to the attack in Kiev, explosions were reported in the northeastern city of Kharkiv on Sunday, and airstrikes were heard in several other cities.
“It’s like a nightmare,” said one woman as she watched the apartment building in Kiev burn. “When is it going to end?”
At the welcoming ceremony for the G7 summit on Sunday in the Bavarian Alps, Mr. Biden responded concisely to a reporter who asked about the Russian strike. “It’s more of their barbarism,” he said.
German Chancellor Olaf Scholz also condemned the attacks, saying they reflected the “brutal” nature of Russia’s war against Ukraine. He promised German solidarity in the presentation of a united front against Moscow.
Better understand the war between Russia and Ukraine
Ahead of a working lunch meeting, British Prime Minister Boris Johnson and Canadian Prime Minister Justin Trudeau were heard by reporters mocking Russian President Vladimir V. Putin and mocking them for taking off their shirts – a stab at Mr. Putin’s penchant for shirtless riding.
The first step in renewing the group’s solidarity began formally before the summit, with the announcement of the ban on gold imports from Russia.
Russia is one of the world’s largest gold producers, and the metal is the second most valuable export to energy products. Most of those exports go to G7 countries, particularly Britain, through the London Gold Trade Center. Russia exported nearly $ 19 billion worth of gold in 2020, almost all going to Britain.
The gold sanctions follow extensive steps to cut Russian export earnings.
The United States has banned oil and gas from Russia, and Europe will ban most Russian oil while reducing gas imports by the end of the year. The United States, the European Union and its allies have also imposed sanctions on Russian officials and other members of the elite, imposing penalties on Russian banks, airlines and other companies.
But while Russia’s oil exports have fallen sharply under the sanctions, its revenues from oil sales have been rising, a function of rising fuel prices. And consumers around the world have experienced increasing pain at the gas station. That combination led G7 leaders to look for ways to reduce both Russian incomes and ease energy price pressures that have contributed to high world inflation.
Janet L. Yellen, the US Treasury Secretary, told foreign leaders privately that the best way to achieve both goals would be to impose a so-called price limit on Russian oil sales to Europe, which would allow Moscow to effectively supply more oil. sell on the world market, but to recover much less revenue from it.
Leaders have yet to fill in the details on how that approach could work, but it could work in harmony with existing sanctions, as Europe’s export ban is phased in over several months, but the price limit could come online much faster.
Supporters of the idea, including some top economists in Ukraine, say it will lead to other nations currently buying Russian oil at a discount, such as India and China, demanding even lower prices from Moscow.
“The Russians have manipulated gas markets and, to the extent they can, oil markets quite cynically, so this will be a chance to turn the table,” said Simon Johnson, an economist at the Massachusetts Institute of Technology who adviser is for the Russian Tanker Tracking Group.
“There is no other active idea that I am aware of that will affect Putin’s income from fossil fuels over the next five months,” he said.
Ms Yellen told foreign leaders that such a limit would be the single best thing they can do now to reduce the chances of a global recession, according to people familiar with the talks, as it would help the stabilize global oil market and help reduce the risks of another price increase.
The plan can be ineffective, especially if the price limit is set too low. Russia may refuse to sell at an extreme discount, instead of paying to cover wells and limit oil production. India and China may continue to pay more for oil than European countries, which provide more revenue to Mr. Putin delivers.
Some European leaders, including Germany’s, opposed the idea, but seemed to have warmed against it at the summit. A Biden administration official told a reporter on Sunday that staff members continue to discuss the idea on the sidelines.
Russia was not the only global adversary that caught the leaders’ attention on Sunday. Late in the afternoon, they outlined a plan to invest in infrastructure projects in less affluent countries around the world, an initiative aimed at countering China’s growing influence of its Belt-and-Road initiative.
The announcement came a year after Mr. Biden urged his fellow leaders at a G7 meeting to act boldly to fight China’s growing influence in Latin America, Africa and parts of Europe, and this was a significant departure in tone at a meeting that largely focused on addressing Russia’s war in Ukraine.
But it was unclear on Sunday whether Mr. Biden and his peers would really deliver close enough money to fit the scale of China’s efforts, which have been going on for years.
Officials from Biden’s advanced administration said the effort would seek to mobilize $ 600 billion across the G7 countries to help less affluent countries spend on a wide range of low-carbon, childcare, telecommunications, water and sewer upgrades, vaccine deployment projects. finance. and more. Mr. Biden said $ 200 billion would come from the United States commitment.
An administration official told reporters that the program would prioritize investment in projects that could be completed quickly and efficiently – and that met strict labor and environmental standards. Officials also tried to put the new program as much more likely to help emerging economies achieve faster and more sustainable economic growth than Chinese loans, which the administration described as “debt traps” for poorer countries.
But much of the G7’s promised money announced on Sunday is not direct government spending. It is a mixture of both public money and private money that may not materialize.
Valerie Hopkins contributed reporting from Kiev, and melissa eddy of Garmisch-Partenkirchen, Germany.