G7 lifts sanctions on Russia, closes to oil price ceiling agreement

Schloss Elmau, Germany, June 27 (Reuters) – The Group of Seven rich democracies will commit on Tuesday to a new, coordinated package of measures aimed at increasing pressure on Russia over its war in Ukraine, and finalize plans to cap Russia’s prices. Oil, a senior US official said on Monday.

The announcement came as the White House said Russia had defaulted on its foreign sovereign bonds for the first time in decades – an assertion Moscow rejected – and as Ukrainian President Volodymyr Zelensky spoke in action with G7 leaders meeting in the Alpine resort of southern Germany. Read more

Zelensky has asked leaders of the Group of Seven leading industrial democracies for a broad range of military, economic and diplomatic support, according to a European official.

The G7 nations, which generate nearly half of the world’s economic output, want to increase pressure on Russia without fueling the already high inflation that is causing pressure at home and hitting the global south.

The price cap could hurt Russian President Vladimir Putin’s war chest while actually driving down energy prices.

The US official said on the sidelines of the annual G7 summit.

The White House said in a fact sheet that the G7 leaders would also make an “unprecedented and long-term security commitment to providing Ukraine with financial, humanitarian, military, and diplomatic support for as long as needed,” including the timely provision of advanced weapons.

Western sanctions have hit the Russian economy hard, and the new measures aim to further deprive the Kremlin of oil revenues. The US official said the G7 countries would work with others – including India – to limit the revenue that Putin could continue to generate.

Indian Prime Minister Narendra Modi is one of five leaders from host countries to join the G7 for talks on climate change, energy, health, food security and gender equality on the second day of the summit.

“Because it is a mechanism that can benefit third countries more than Europe,” an EU official said. “These countries are asking questions about feasibility, but in principle paying less for energy is a very common topic.”

Targeting Russian gold, defense sector

A US official said the news that Russia had defaulted on its foreign sovereign bonds for the first time since the Bolshevik Revolution of 1917 demonstrated the effectiveness of Western sanctions.

“This morning’s news of discovering Russia’s shortcomings, for the first time in more than a century, illustrates how powerful the actions of the United States, along with allies and partners, are, as well as how dramatic the impact is on the Russian economy.”

The Kremlin, which has the money to make payments thanks to rich energy revenues, quickly rejected the US statement, accusing the West of artificially pushing it into default. Read more

New sanctions planned by the G7 countries will target Moscow’s military production, tighten its gold imports, and target officials installed by Russia in the disputed areas. Read more

The official said that the G7 leaders will task their governments to work intensively on how to implement the Russian price cap, working with countries around the world and stakeholders including the private sector.

The United States said it would also apply sanctions to hundreds of individuals and entities adding to the more than 1,000 already sanctioned, target companies in several countries and impose tariffs on hundreds of Russian products. Read more

A second senior administration official said relevant agencies would release details on Tuesday to reduce any flying risks.

The Ukraine crisis has distracted from another crisis – climate change – that was originally destined to dominate the summit. Activists fear Western countries are tempering their climate ambitions as they scramble to find alternatives to Russian gas imports and rely more on coal, a dirtier fossil fuel, instead.

Japan is also seeking to remove a zero-emissions car target from a G7 statement expected this week, according to a proposed draft seen by Reuters. Read more

(Reporting by Andrea Shalal and Sarah Marsh; Additional reporting by Angelo Amanti and Phil Blinkensop; Editing by Thomas Escret, Mark Heinrich and Alex Richardson

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