The Ukraine Crisis: G-7 Limited in Actions Against Moscow

"BERLIN -- The Group of Seven rich democracies ended their summit with an agreement to discuss a batch of new sanctions against Russia, but the gathering underlined the limits of using economic tools to punish Russia.

Sanctions have proven slow to take effect, some of them have backfired against the West, and new ones have so far been too complex to deploy quickly.

G-7 leaders displayed some unity during their three-day summit in the German Alps as they pledged their unwavering support to Ukraine, with no sign of dissent on public display. Yet, Kyiv and some Western experts said the Russian advance could only be halted in the short term with more heavy weapons.

The unprecedented sanctions against Russia implemented by the G-7 and other nations -- targeting Moscow's economy, energy exports and central-bank reserves -- have caused global market volatility and raised energy costs.

Now high inflation, slowing growth, and the specter of energy shortages in Europe this winter are damping the West's appetite for tougher sanctions.

Divergences among the leaders of the U.S., Canada, Britain, Germany, France, Italy and Japan prevented them from agreeing on concrete new sanctions, with the group only agreeing to start work on measures ranging from a price cap on Russian oil purchases to a gold embargo. With most immediately available options for punishing Russia largely exhausted, only more complicated and more controversial alternatives remain on the table.

"We will consider a range of approaches, including options for a possible comprehensive prohibition of all services, which enable transportation of Russian seaborne crude oil and petroleum products globally," the G-7 communique read. "We task our relevant Ministers to continue to discuss these measures urgently, consulting with third countries and key stakeholders in the private sector, as well as existing and new suppliers of energy, as an alternative to Russian hydrocarbons."

Any of the measures outlined in the G-7 statement would take a long time to be drafted and implemented, said several officials and experts.

"This is a very ambitious undertaking that will need more time and work," German Chancellor Olaf Scholz, whose government holds the G-7 presidency and hosted the summit, said of the U.S. proposals for capping Russian oil prices.

However, he warned that there was no other alternative to confronting Russia. "There cannot be a return to the time before the sanctions on Russia, because when the situation changes, we, too, must change," Mr. Scholz said.

The leaders' inability to commit to new detailed measures demonstrated that existing sanctions have gone beyond most Western policy makers' pain threshold, said John Lough, an associate fellow at Chatham House, a British think tank.

One Achilles' heel of the oil-and-gas sanctions is that they can work fully only if most of the world joins them. Plans to sanction oil exports, for instance, have been blunted by the willingness of China, India and others to buy Russian oil. The revenue Russia has lost in export volumes it has made up as a result of rising prices.

To expand the global alliance against Russia's aggression, Mr. Scholz invited the leaders of emerging economies to the G-7 summit, including India, Indonesia, South Africa, Senegal and Argentina. The guests showed little commitment to join the sanctions, however, according to Western officials.

Indian Prime Minister Narendra Modi told Mr. Scholz that the sanctions on Russia are damaging the economies of developing countries, and that India couldn't join any efforts against Russia.” [1]

 

Dear leader of Senegal, you can sit together with the leaders of the richest countries of the world for a day, just stop buying cheap oil. Just starve a little...

 

1.  The Ukraine Crisis: G-7 Limited in Actions Against Moscow
Pancevski, Bojan. 
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 29 June 2022: A.8.