G7 set to back moves for Russian oil price cap and tariffs on goods

27 June 2022, 09:24

Germany G7 Summit
Germany G7 Summit. Picture: PA

The leaders are meeting in the German Alps, focusing chiefly on the invasion of Ukraine.

The Group of Seven economic powers are set to announce an agreement to pursue a price cap on Russian oil, aiming to curb Moscow’s energy revenues, a US official has said.

The move is part of a joint effort of support for Ukraine that includes raising tariffs on Russian goods and imposing new sanctions on hundreds of Russian officials and entities supporting the war.

Leaders were finalising the deal to seek a price cap during their three-day summit at Schloss Elmau in the German Alps.

The details of how a price cap would work, as well as its impact on the Russian economy, were to be resolved by the G7 finance ministers in the coming weeks and months.

The largest democratic economies will also commit to raising tariffs on Russian imports to their countries, with the US announcing new tariffs on 570 categories of goods, as well as use of sanctions to target Russia’s defence supply chains that support its effort to rearm during the war.

The G7 leaders are in line to commit to supporting Ukraine in the long term, with the US preparing to announce the purchase of an advanced surface-to-air missile system for Kyiv.

Germany G7 group photo
The G7 leaders plus European Commission President Ursula von der Leyen and European Council President Charles Michel (AP)

Talks by video link are also scheduled during the summit with Ukrainian President Volodymyr Zelenskyy.

Monday’s session of their three-day summit begins with a focus on Ukraine. Later, G7 leaders will be joined by the leaders of five democratic emerging economies – India, Indonesia, South Africa, Senegal and Argentina – for a discussion on climate change, energy and other issues.

The war in Ukraine was already at the forefront of the G7 leaders’ minds as they opened their summit at the secluded Schloss Elmau luxury hotel on Sunday – just as Russian missiles hit the Ukrainian capital Kyiv for the first time in weeks.

Macron and Biden
French President Emmanuel Macron whispers to US President Joe Biden following their dinner at the G7 Summit in Elmau, Germany (AP)

US President Joe Biden said Russian President Vladimir Putin “has been counting on, from the beginning, that somehow Nato and the G7 would splinter – but we haven’t and we’re not going to”.

Prime Minister Boris Johnson warned the leaders not to give in to “fatigue”.

On Monday, they have the opportunity to demonstrate that unity to Mr Zelensky and reaffirm their commitment to supporting Kyiv financially and otherwise.

Mr Biden is set to announce that the US is providing an advanced surface-to-air missile system to Ukraine, as well as additional artillery support, according to sources, in the latest assistance meant to help the country defend against Russia’s invasion.

The US is understood to be purchasing Nasams, a Norwegian-developed anti-aircraft system, to provide medium- to long-range defence. Nasams is the same system used by the US to protect the sensitive airspace around the White House and US Capitol in Washington.

Additional aid includes more ammunition for Ukrainian artillery, as well as counter-battery radars, to support its efforts against the Russian assault in the Donbas, the source said.

Mr Biden hopes to use his trip to Europe to proclaim the unity of the coalition pressing to punish Russia for its invasion of Ukraine as much as he is urging allies to do even more — seeking to counter doubts about its endurance as the war grinds into its fifth month.

The summit’s host, German Chancellor Olaf Scholz, said last week that he wants to discuss the outlines of a “Marshall plan for Ukraine” with his G7 counterparts, referring to the US-sponsored plan that helped revive European economies after the Second World War.

With the war still in progress and destruction mounting by the day, it is unlikely to be a detailed plan at this stage.

Mr Scholz has said that “rebuilding Ukraine will be a task for generations”.

The G7 is already committed to help finance Ukraine’s immediate needs. Finance ministers from the group last month agreed to provide 19.8 billion dollars (£16 billion) in economic aid to help Kyiv keep basic services functioning and prevent tight finances from hindering its defence against Russian forces.

A senior US administration official said the US and Europe are aligned in their aims for a negotiated end to the conflict, even if their roles sometimes appear different.

Joe Biden and Boris Johnson
Joe Biden and Boris Johnson (AP)

Mr Scholz and French President Emmanuel Macron have tried to facilitate that through active conversations with Russian President Vladimir Putin and Zelensky, while also supplying weapons to Ukraine.

The US has largely cut off significant talks with Russia and aims to bolster Ukraine’s battlefield capacity as much as possible so that its eventual position at the negotiating table is stronger.

The endurance of the tough sanctions on Russia may ultimately come down to whether the G7 and other leaders can identify ways to ease energy supply issues and skyrocketing prices once winter hits, as they seek to disengage from Russian sources of fuel.

The G7 meeting is sandwiched between a European Union summit last week that agreed to give Ukraine the status of a candidate for membership – kicking off a process that is likely to take years with no guarantee of success – and a summit of Nato leaders starting Tuesday in Madrid.

The leaders of the G7 – the US, Germany, France, the UK, Italy, Canada and Japan – may hope to make some progress in bringing their counterparts from their five guest countries closer to Western views on sanctions against Russia.

Mr Scholz also is eager to win over such countries for his idea of a “climate club” for nations that want to tackle the issue at a faster pace.

By Press Association

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