Russian attack on Kiev threatens during G7 summit


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 oil revenues even as Russian forces fired missiles at Kiev for the first time in weeks made it rain. The dueling escalation underlined how the war in Ukraine has consumed world politics and the global economy.

President Biden and the British government said members of the Group of 7 — Canada, France, Germany, Italy, Japan, Britain and the United States — would move on Tuesday to ban imports of Russian gold. Representatives of the assembled countries were also negotiating an agreement to buy Russian oil only at a steep discount.

US officials see both the gold import ban and the potential oil price ceiling as ways to undermine key revenue sources for Moscow’s war effort and further isolate it from the international financial system. Such a push was a theme at the meeting, both publicly and behind the scenes, as leaders sought to show solidarity with Ukraine. On Monday, Ukrainian President Volodymyr Zelensky will address the summit.

As the fighting in Ukraine enters its fifth month, the leaders of Group of 7 countries – the world’s richest major democracies – are trying to maintain unity against Russia in the face of the war’s growing toll on the global economy. Western sanctions designed to hurt Russia have rocketed food and energy prices around the world, even as Moscow’s war machine shows little sign of slowing down.

Russia appeared to be sending a message of defiance to G7 leaders on Sunday morning when it fired another round of rockets into an apartment building in Kiev, killing at least one person. The top three floors of the nine-story building were reported destroyed. Rescuers were able to retrieve a 7-year-old girl from the rubble, but her father was killed and her mother, a Russian citizen, was injured, authorities said.

Russia also escalated cruise missile use over the weekend, launching dozens of strikes on targets across the country. In addition to the Kiev attack, explosions were reported on Sunday in the northeastern city of Kharkov and air raid sirens were heard in several other cities.

“It’s like a nightmare,” one woman said as she watched the Kiev apartment building burn down. “When will it end?”

During the welcoming ceremony for the G7 summit in the Bavarian Alps on Sunday, Mr Biden succinctly responded to a reporter who asked about the Russian strike. “It’s more their barbarity,” he said.

German Chancellor Olaf Scholz also condemned the attacks, saying they reflected the “ruthless” nature of Russia’s war against Ukraine. He promised Germany’s solidarity in presenting a united front against Moscow.

Ahead of a working lunch meeting, Prime Minister Boris Johnson of Great Britain and Prime Minister Justin Trudeau of Canada were overheard by reporters mocking Russian President Vladimir V. Putin and joking that they should take off their shirts — a poke at Putin’s fondness for shirtless riding.

The first step in renewing the group’s solidarity came before the summit formally began, 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 most valuable export after energy products. Most of that export goes to the G7 countries, especially Great Britain, through the gold trading center of London. Russia exported nearly $19 billion in gold in 2020, almost all of it to Britain.

The gold sanctions follow extensive steps to cut Russia’s export earnings.

The United States has banned oil and gas from Russia, and Europe will ban most Russian oil and cut 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 and imposed penalties on Russian banks, airlines and other companies.

But while Russia’s oil exports have plummeted under sanctions, revenues from oil sales have soared, reflecting rising fuel prices. And consumers around the world have faced increasing pain at the gas pump. With that combination, G7 leaders have been looking for ways to both cut Russian revenues and ease the pressure on energy prices that has contributed to high global inflation.

US Treasury Secretary Janet L. Yellen has secretly told foreign leaders that the best way to achieve both goals would be to impose a so-called price cap on Russian oil sales to Europe, effectively giving Moscow more oil can sell to the world market, but get much less income from it.

Leaders have yet to fill in the details on how that approach might work, but it could work in harmony with existing sanctions as the European export ban is due to be introduced in several months, but the price cap could come online much sooner.

Supporters of the idea, including some top economic officials in Ukraine, say it would lead other countries currently buying Russian oil at a discount, such as India and China, to demand even lower prices from Moscow.

“The Russians have quite cynically manipulated the gas markets and, to the extent they can, the oil markets, so this could be an opportunity to turn the tables,” said Simon Johnson, an economist at the Massachusetts Institute of Technology and adviser. of the Russian Tanker Tracking Group.

“There is no other active idea I know of in the next five months that would impact Putin’s fossil fuel revenues,” he said.

Ms. Yellen has told foreign leaders that such a cap would be the best they can do right now to minimize the chance of a global recession, according to people familiar with the talks, as it would help boost the global oil market. stabilize and help mitigate the risks of a new price spike.

The plan may prove ineffective, especially if the price cap is set too low. Russia could refuse to sell at extreme discounts, instead paying to plug wells and curtail oil production. India and China could continue to pay more for oil than European countries, which would bring Mr Putin more income.

Some European leaders, including Germany’s, have opposed the idea but appeared to be enthusiastic about it during the summit. An official in the Biden administration told a reporter on Sunday that employees continued to discuss the idea on the sidelines.

Russia was not the only global opponent to draw the attention of leaders on Sunday. Late in the afternoon, they worked out a plan to invest in infrastructure projects in less wealthy countries around the world, an initiative designed to counter China’s growing influence from 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 combat China’s growing influence in Latin America, Africa and parts of Europe, and it was a remarkable turnaround in tone at a meeting largely focused on Russia’s war in Ukraine.

But it was unclear on Sunday whether Mr Biden and his colleagues would actually come close to making enough money to match the magnitude of China’s efforts, which have been underway for years.

Biden administration officials said the effort would aim to mobilize $600 billion in the G7 countries to help less-wealthy countries fund spending on a wide range of low-carbon energy, childcare, advanced telecommunications, water and sewage upgrades, vaccine deployment and more. Mr Biden said $200 billion would come from the United States pledge.

A government official told reporters the program would prioritize investments in projects that can be completed quickly and efficiently — and that meet strict labor and environmental standards. Officials also tried to view the new program as a much greater opportunity to help emerging economies achieve faster and more sustainable economic growth than Chinese loans that the government has described as “debt traps” for poorer countries.

But much of the G7’s promised money announced Sunday is not direct government spending. It is a mix of both public money and private money that may not materialize.

Valerie Hopkins contributed reporting from Kiev, and Melissa Eddie from Garmisch-Partenkirchen, Germany.

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