TELFS, Austria – President Joe Biden and several of his counterparts in the Group of Seven nations on Sunday announced a ban on new imports of Russian gold – and appeared to be moving toward consensus on a price cap on Russian gas – to further isolate the country from financial markets and punish President Vladimir Putin for his invasion of Ukraine.
The ban on gold imports, which could amount to a penalty of tens of billions of dollars, appeared to be the primary new economic sanction targeting Russia to come out of the summit. Administration officials declined to comment on whether other punitive steps would be taken.
“The United States has imposed unprecedented costs on Putin to deny him the revenue he needs to fund his war against Ukraine,” Biden tweeted Sunday morning, noting that gold is “a major export that rakes in tens of billions of dollars for Russia.”
Biden and other leaders of industrialized nations began their meetings in southern Germany on Sunday for a summit set to be dominated by discussions about the fallout from the war in Ukraine.
Biden, who arrived late Saturday night, attended Mass with a priest from the U.S. Army before starting his day with a bilateral meeting with German Chancellor Olaf Scholz to discuss the war.
The two leaders made small talk as Biden, silhouetted by the Alps, quipped that he used to ski a lot but had not done so in some time. “It’s beautiful,” he remarked.
The conversation then turned more serious, with Biden thanking Scholz for Germany’s resolve and his ability to keep the alliance united.
“We have to stay together. Because Putin has been counting on from the beginning that somehow NATO and the G-7 would splinter,” Biden said. “But we haven’t, and we’re not going to.”
In the afternoon, the summit’s leaders announced a new global infrastructure investment program, with a goal of mobilizing $600 billion in public and private investments by 2027. The spending aims – with the United States pledging $200 billion – would go toward improving health, communications and energy infrastructure in low- and middle-income countries. It aims to help counter ambitious spending around the world by China, which has invested heavily in Africa and Asia through its Belt and Road Initiative.
“Our nations and our world stand at a genuine inflection point in history,” Biden said.
Some of the initial projects that Biden administration officials highlighted include a $2 billion project to develop a solar panel project in southern Angola; building telecommunications cables that would connect Singapore to France through Egypt and the Horn of Africa, extending high-speed internet access; and building a large multivaccine manufacturing facility in Senegal.
The day also included hints of disagreements among some of the top leaders, including France President Emmanuel Macron and British Prime Minister Boris Johnson.
In a statement, Downing Street said that Johnson had “stressed” to Macron that “any attempt to settle the (Ukraine) conflict now will only cause enduring instability and give Putin license to manipulate both sovereign countries and international markets in perpetuity.”
The remarks appeared to be criticism of Macron’s comments in mid-June that Ukraine President Volodymyr Zelensky and his officials will need to negotiate with Russia at some point. Coming before Macron, Scholz and other European leaders traveled to the Ukrainian capital of Kyiv, those comments raised concerns among Ukrainian officials that France and Germany might push for talks with Russia as the economic toll of the war mounts.
French officials have rejected those concerns and clarified that it is up to Ukraine to determine when the time for talks has come. A spokesperson for the French presidency said Sunday that Macron and Johnson “had a discussion on Ukraine in which the President strongly reaffirmed his determination to support Ukraine.”
France has delivered or pledged almost one fourth of its existing stocks of Caesar artillery weapons systems to Ukraine, and the country’s lower dependency on Russian fossil fuels allowed France to become an early champion of an European Union embargo on Russian oil.
But both Macron and Scholz have spoken to Putin several times on the phone since the invasion, which has prompted particular criticism in Eastern Europe.
The United States has been pushing for an agreement on a price cap on Russian oil imports to hurt Moscow’s ability to finance the war. The G-7 leaders are moving toward a consensus on a price cap, according to one person with knowledge of Sunday’s discussions who spoke on the condition of anonymity to discuss the private talks.
The aim is to simultaneously put a ceiling on the amount that nations pay for Russian oil, with the hope of hurting Moscow’s ability to fund the war, while trying to tamp down inflation at the fuel pump. Soaring prices for oil have taken some of the bite out of countries’ efforts to diversify from Russian energy since Moscow is paid more for less volume.
To incentivize other countries to take part, the leaders have discussed ways to make it difficult to insure or ship Russian oil that doesn’t comply with the price cap.
During the meeting on Sunday, Macron stressed that a price cap should also cover gas. Price caps on Russian natural gas flowing in pipelines to Europe are considered easier to enforce as the infrastructure means it can’t be sold elsewhere.
Scholz has cautioned that an oil price cap would only be useful if all purchasers were on board. “The questions that need to be solved are not trivial questions,” a German official said. “But we are well on the way to finding an agreement.”
Italian Prime Minister Mario Draghi raised concerns about the potential political ramifications of rising prices.” The energy crisis must not produce a return of populism,” he said, according to the individual with details of the discussion.
“Putting a ceiling on the price of fossil fuels imported from Russia has a geopolitical objective as well as an economic and social one,” Draghi said. “We need to reduce our funding to Russia. And we must eliminate one of the main causes of inflation.”
During a background briefing with reporters ahead of the summit, administration officials cast the move to ban gold imports as an important demonstration that the world’s largest economies are willing to continue punishing Russia, one of the world’s largest exporters of gold. The official announcement will come Tuesday, according to administration officials, and the U.S. Treasury Department will make a formal determination to prohibit new imports of gold.
“The U.S. has rallied the world in imposing swift and significant economic costs to deny Putin the revenue he needs to finance his war,” said one of the officials, speaking on the condition of anonymity under ground rules for the briefing.
The official hinted at additional steps that could be taken to further isolate Russia but suggested those would come in the weeks ahead, rather than more immediately as part of the summit.
“This is a key export, a key source of revenue, a key alternative for Russia, in terms of their ability to transact in the global financial system,” the official said. “Taking this step cuts off that capacity and again is an ongoing illustration of the types of steps the G-7 can take collectively to continue to isolate Russia and cut it off from the global economy.”
One aim of the United States and its international partners, the official said, would be to prevent Russia – which has found ways around previous sanctions – from evading the ban on imports. The fact that they have moved toward banning gold imports, administration officials say, was effectively a sign that other ways for Russia to access global financial markets had been cut off.
Russian oligarchs, for example, have sought to purchase gold bullion as a way to avoid the financial impact of Western sanctions, and G-7 leaders hope this will send another signal to Putin’s top allies.
“The measures we have announced today will directly hit Russian oligarchs and strike at the heart of Putin’s war machine,” Johnson said as part of his own announcement about the ban on gold imports.
“We need to starve the Putin regime of its funding,” he added. “The U.K. and our allies are doing just that.”
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