Ahead of the G-7 summit in Japan, a U.S. official revealed that the United States and other major economies would introduce fresh sanctions and export controls specifically aimed at Russia in response to its ongoing conflict with Ukraine
Russia’s isolation from sanctions is believed to be at its peak since the aftermath of the Bolshevik Revolution of 1917, during which the country faced a blockade imposed by the World War I allies. As the Group of Seven (G-7) summit unfolds in Hiroshima, Japan, the consortium of affluent democrats is anticipated to intensify their measures to compel Moscow to cease its involvement in the Ukrainian conflict.
While the current sanctions on Russia are among the most stringent ever imposed on a major economy, the G-7 still possesses significant leeway to escalate the pressure. However, divisions concerning crucial areas such as energy and the mixed effectiveness of sanctions, in general, pose a potential obstacle to the success of endeavors to bring Moscow under control.
As the G7 summit looms in Japan, a US official disclosed that the United States & other prominent economies will unveil new sanctions & export controls targeting Russia. These measures are designed to demonstrate the continued support of world powers for Ukraine.#Ukriane#Russiapic.twitter.com/GZgLZeQ7aP
Lukasz Rachel, a member of Stanford University’s International Working Group on Russian Sanctions member, highlighted ample room for the G-7 to impose additional restrictions and strengthen the current ones. According to Rachel, key areas that warrant attention include:
Oil and Energy
Expanding non-energy trade sanctions
Closing loopholes in these areas
Implementing technology-related sanctions
The G-7, comprising the United States, France, Canada, Japan, the United Kingdom, Italy, and Germany, is expected to prioritize reinforcing the enforcement of existing sanctions, specifically targeting the prevention of sanctions evasion involving third-party nations.
G-7 and E.U. Take Action to Strengthen Sanctions against Russia
During the G-7 summit, finance ministers and central bank governors issued a joint statement on Saturday, vowing to counter any attempts to evade and undermine their existing sanction measures. The European Union, although a non-enumerated member, is contemplating imposing penalties on companies that aid Russia in circumventing sanctions. This move would bring the E.U. closer to alignment with the U.S. sanctions regime.
In a T.V. interview with the Financial Times, Josep Borrell, the E.U.’s foreign policy chief, emphasized the need for the bloc to crack down on importing Indian petroleum products that rely on Russian oil. Additionally, the administration of U.S. President Joe Biden is actively pushing for stricter controls on high-tech exports by reversing the presumption and adopting a more restrictive approach, authorizing only explicitly permitted items.
Resilience amid Sanctions
Russia’s economy has defied predictions of collapse, showing greater resilience than anticipated despite the sanctions imposed by Western nations. In 2022, the country’s economy contracted by a modest 2.1 percent, defying expectations of a severe decline. While trade between Russia and G-7 countries has experienced a significant decline, China, India, and Turkey have stepped in to fill the gap by increasing their imports of Russian coal, oil, and gas.
Notably, specific research indicates the involvement of Western shipping companies in violating sanctions on Russian energy exports. The latest study by the Kyiv School of Economics revealed that during the first quarter of 2023, approximately 96 percent of oil shipments from the Russian port of Kozmino were sold above the $60 oil price cap the Group of Seven set in the previous year.
Agathe Demarais, the global forecasting director of the Economist Intelligence Unit, emphasized that the summit’s focus would primarily be on implementation, implementation, and implementation in the realm of sanctions. Demarais highlighted recent media reports drawing attention to sanctions evasion by third countries, including Turkey, Serbia, Kazakhstan, and the UAE.
G7 Considers Sanctions on Russia Over Ukraine War Source: Web
Rather than reducing the oil price cap, the G-7 aims to strengthen this measure’s effective enforcement. However, Demarais, also the author of the book “Backfire: How Sanctions Reshape the World Against U.S. Interests,” expressed uncertainty about the G7’s ability to close these loopholes effectively, given the extent of the problem and the Kremlin’s resourcefulness in evading sanctions.
Assessing the Effectiveness of Sanctions
The G-7 faces the challenge of evaluating the limited effectiveness of sanctions in bringing about change in Russia and other isolated nations like North Korea and Cuba. In a state-of-the-nation address commemorating the first anniversary of the Ukraine war in February, Russian President Vladimir Putin expressed a long-term approach, envisioning gradual successes.
Kristy Ironside, a historian specializing in the Soviet Union and modern Russia at McGill University in Canada, expressed a generally pessimistic view based on historical evidence regarding the efficacy of sanctions. Ironside highlighted that sanctions are often viewed skeptically as they are perceived as a means to take action when natural alternatives, such as military intervention, are undesirable.
“Sanctions are most effective when there is significant existing economic integration or desired economic cooperation, but such conditions have been limited since 2014,” Ironside stated. She highlighted that Russia has been making its economy resilient to sanctions, including developing domestic food chains and diversifying its currency reserves into yuan.
Ironside added that the application of sanctions and the prospect of further sanctions have failed to deter Putin from continuing the war in Ukraine, leading her to believe that they will not have a significant impact. However, Rachel, a member of the Russian sanctions group at Stanford University, argued that sanctions have already affected Russia’s military campaign, and the G-7 should intensify efforts to support Ukraine and weaken the Russian state.
Rachel acknowledged the difficulty of precisely assessing the impact of sanctions. Still, he emphasized that the direction of their impact is evident: the war has proven disastrous for Russia and the Kremlin, and with increased Western support, it will eventually lead to a devastating defeat.
