G7 leaders work to ‘starve’ Russia of oil, gold money

Tuesday, June 28th, 2022 08:40 | By

Leaders of G7 countries plan to announce a ban on gold imports from Russia -- the latest in a series of sanctions the club hopes will further hit Russia’s economy over its invasion of Ukraine.

The group of world leaders will huddle on the summit’s opening day Sunday to discuss how to secure energy supplies and tackle inflation, aiming to keep the fallout from Russia’s invasion of Ukraine from splintering the global coalition working to punish Moscow.

British Prime Minister Boris Johnson said a ban by G7 countries on Russian gold will “directly hit Russian oligarchs and strike at the heart of Putin’s war machine.”

“Putin is squandering his dwindling resources on this pointless and barbaric war. He is bankrolling his ego at the expense of both the Ukrainian and Russian people,” Johnson said. “We need to starve the Putin regime of its funding.”

The value of gold exports to the Russian elite has increased since the war began as wealthy Russians seek to skirt Western sanctions. It has been the top Russian export after energy in recent years - reaching almost $19 billion or about 5 per cent of global gold exports in 2020 according to the White House.

Of Russian gold exports, 90 percent was consigned to G7 countries. Of these Russian exports, over 90 percent, or nearly $17bn, was exported to the UK. The US imported under $1 million in 2020 and 2021.

The G7 was expected to formally announce the ban on Russian gold on Tuesday, according to President Joe Biden’s administration officials, who spoke on condition of anonymity to discuss details before the announcement.

Biden arrived in Germany’s picturesque Bavarian alps early Sunday morning to join his counterparts for the annual meeting of the world’s leading democratic economies, where the reverberations from the brutal war in Ukraine will be front and centre in the discussion. The leaders of France, Germany, Italy, the UK, the US, Canada, Japan and the European Union attending the summit aim to present a united front in support of Ukraine as the conflict enters its fourth month.

Among the issues to be discussed are price caps on energy which are meant to limit Russian oil and gas profits that Moscow can put to use in its war effort.

A senior German official, speaking on condition of anonymity consistent with department rules, said the US idea of price caps was being discussed intensely, in terms of how it would work exactly and how it would fit with the US, EU, British, and Canadian and Japanese sanctions regimes.

Officials were also set to discuss how to maintain commitments to addressing climate change while also solving critical energy supply needs as a result of the war.                                             

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