KRUN, Germany – Four months after Russia’s invasion, unprecedented Western economic retaliation and military aid to Ukraine have not curtailed Vladimir V. Putin’s ability or apparent determination to wage war, leading leaders of the world’s richest democracies let seize upon new ways of determining him.
President Biden and the other Group of 7 leaders, who met in the Bavarian Alps on Monday, were ready to adopt an aggressive but untested plan to manipulate the price of oil and the revenue that Mr. Putin’s war machine endorsed, to limit.
Even as they sought various tactics to prevent Moscow, Russia launched a barrage of missiles deep into Ukraine, hitting civilian targets, including, Ukrainian officials said, a crowded shopping mall where at least 13 people were killed. In a statement condemning that strike, G7 leaders said: “Indiscriminate attacks on innocent civilians are a war crime. Russian President Putin and those responsible will be held accountable.”
Allied leaders hoped that economic sanctions would damage the Russian economy so severely and quickly that Mr. Putin would face economic and political pressure to cut short the war. Instead, Russia’s oil revenues remain high, internal opposition is muzzled and, as Mr. Putin is rejoicing, it is the West that is suffering from high fuel prices that is facing domestic political setbacks.
Russia will undoubtedly suffer more over time – its economy will shrink by almost 10 percent this year, economists predict, and a European Union embargo on most Russian oil imports will take effect in December. But as Ukraine and Russia know all too well, every day counts in a war of exhaustion.
Administration officials said Monday that Mr. Biden will send advanced air defense systems to Ukraine, and NATO has announced plans to significantly increase the number of troops stationed in Eastern Europe and the troops ready for rapid deployment.
But the most recent – and, administration officials said, possibly the most consequent – step has come from the G7 summit, where leaders approach an agreement in principle to adopt price caps on Russian oil, restricting cash flow to the Kremlin.
Despite the sanctions imposed so far, Russian oil revenues have grown this year along with rising fuel prices, while consumers around the world have experienced increasing pain at the petrol pump. As Russia’s sales to the West declined, its sales to China and India grew.
The United States banned Russian oil imports, but it was small, and the embargo by Europe, historically Russia’s largest customer, has not yet come into effect. Any price limits will not interfere with that prohibition.
A price cap would allow Russia to continue selling oil abroad, but sharply cut its revenues. This is the brainchild of Janet L. Yellen, mr. Biden’s treasury secretary, who has told world leaders in recent weeks that such a limit would be the best way to lower oil prices and prevent a global recession.
The details are likely weeks or more away from completion, requiring intense negotiations by G7 finance ministers, private companies and leaders of countries in Latin America, Africa and elsewhere buying Russian oil. There is no guarantee that the plan will come together quickly, or at all, or that it will succeed as the G7 leaders hope.
On Sunday, G7 leaders said they were banning the import of Russian gold, another sign that the West was looking for new ways to isolate Moscow financially.
Better understand the war between Russia and Ukraine
The G7 nations “are steadfast in our solidarity with Ukraine,” he said. Biden and his co-leaders said in a written statement on Monday, “and reaffirms our unwavering commitment to support the government and people of Ukraine in their courageous defense of their country’s sovereignty and territorial integrity.”
Mr. Biden did not speak to cameras or reporters on Monday, and kept an exceptionally low profile at the summit. His national security adviser, Jake Sullivan, told reporters that President Volodymyr Zelensky of Ukraine, who spoke via video link, told G7 leaders that “he believes that an escalating conflict is not in the interests of the Ukrainian people. , for obvious reasons. “
“He would therefore like to see his army and those in the West who support his army make the most of the next few months,” he said. Sullivan said, “to put the Ukrainians in as good a position as they possibly can. With regard to the situation on the ground.”
But events outside the Alps underscored how Mr. Putin continues to hold a strong hand, with Russian energy revenues amounting to about $ 1 billion a day, enabling him to increase pensions and wages at home while sustaining a war effort that has widened in recent days.
On Monday, Moscow pushed forward with slow but steady gains in eastern Ukraine, with both sides suffering heavy casualties while maintaining the sustained protection of cities throughout Ukraine.
In Kremenchuk, a city far from the front lines in central Ukraine, an explosion reduced a shopping center to a blazing, partially collapsed ruin, and officials said it was hit by a Russian missile. They said at least 13 people were killed, 10 missing and 25 in hospital.
The mall had “no strategic value”, Mr. Zelensky wrote on Telegram. “Just the attempt of people to lead a normal life, which makes the occupiers so angry.”
Northeast of the city of Kharkiv, a missile attack killed four people and injured 19, including four children, according to regional governor Oleg Synegubov. He wrote on Telegram: “The enemy is deliberately terrorizing the civilian population.”
The strikes came a day after missiles rained down on Kiev, the capital.
Mr. Zelensky’s first request to G7 leaders on Monday was for air defense systems to defend against cruise missiles, Mr. Sullivan said, and Mr. Biden “was able to respond positively to him about it.”
Officials said the United States would provide Ukraine with NASAMS – an advanced, medium-to-long-range surface-to-air missile defense system. Mr. Sullivan said the administration would also send more ammunition for artillery and anti-battery radar systems.
In Brussels, NATO Secretary-General Jens Stoltenberg said member states would increase the number of troops “on standby” ready for rapid deployment, more than sevenfold, from 40,000 to 300,000, and that the number stationed in countries that will sharply increase Russia’s border. and its ally, Belarus.
The announcement came ahead of a NATO summit to begin on Tuesday, where the alliance is expected to update its strategic mission statement for the first time in 12 years, identifying Russia as an adversary rather than a potential partner, and China as a possible threat.
Mr. Biden urged his counterparts to implement the oil price cap. Yellen was driven to support, and European leaders became hot for the idea as they grew to understand how it could work in concept.
Ms Yellen is an economist by training, and her idea rests on an economist’s logic: that countries should strive to pay as little as possible for an important commodity like oil, no matter where their leaders stand over the Ukraine war.
It is also based on an idea that for anyone who has watched Mr. Biden and allies targeting Russian oil exports shortly after the invasion, may seem frightening. Instead of driving Russian oil off the world market, the price limit will try to keep Moscow’s oil exports flowing – but at a reduction rate.
With a price limit, US officials hope to take advantage of the fact that Western banking, insurance and shipping companies facilitate much of Russia’s oil exports – and to use those industries as a choking point to lower the price of Russian oil.
There are several ways in which a limit can work, but under any of them, certain countries will continue to buy oil from Russia, but only at a price far below the world market value. Administration officials believe that China and India could most likely insist on paying a similarly low rate – lower than the discount they currently enjoy – out of pure economic self-interest.
Ideally, officials say privately, that the chain of events could convince oil traders that global oil inventories will not be disrupted when Europe’s import ban increases in the coming months, a development that could drive down prices.
That calculation may be incorrect. Russia may decide to sell less oil if the price is kept low, although administration officials say it will be expensive for Russian oil producers to cover their wells.
There is also the political risk, in Europe and possibly the United States, if consumers get angry that Chinese and Indian consumers can buy Russian oil at a discount.
For Europe, which is preparing for a financial hit from the decision to phase out most Russian oil imports by year-end, an oil price cap could be good policy but tough politics.
If G7 leaders approve the policy, its implementation will be cumbersome, politically charged and time-consuming, European officials warned on Monday. Reaching consensus in Europe to endorse an oil embargo has almost broken the bloc’s unity against Russia; Officials and diplomats of the European Union have warned that the reopening of that debate to set the price limit could face resistance by a number of EU countries.
A final agreement will also require complex discussions that are likely to involve private companies, such as insurers and large financial companies, along with countries outside Europe and the United States that import oil from Russia.
U.S. officials said negotiators could work out details, with the G7 leaders’ blessing, although they refused to give an exact timeline.
“I think it can be done relatively quickly,” he said. Sullivan said.
Reporting contributed by Richard Perez-Pena of New York, Valerie Hopkins of Kremenchuk, Ukraine, Michael D Shear of Madrid, Matina Stevis-Gridneff and Steven Erlanger of Brussels, Anton Troyanovsky of Paris and Ivan Nechepurenko of Tbilisi, Georgia.