The G7 Finance Ministers gathered on September 2, 2022, to talk about how we should all respond to Russia’s aggression against Ukraine and its negative effects on the world economy.
We are unwavering in our sympathy with and support for Ukraine. For as long as it takes, we will continue to support Ukraine.
We will not stop denouncing Russia’s and Belarus’ cruel, unjustified, unlawful, and unprovoked campaign of aggression on Ukraine.
Aggression by Russia is disrupting the world economy and endangering the security of the world’s food and energy supplies.
All economies, especially those already struggling with food insecurity and budgetary issues, are disproportionately affected by the economic costs of the conflict and ensuing price rises for disadvantaged individuals.
We stress our joint commitment to the tough, well-coordinated sanctions we’ve implemented in response to Russia’s actions, penalties that are already having a significant negative effect on the Russian economy.
Over time, the combined effect of these actions will have a drastic negative influence on Russia’s economic potential.
We are still steadfast in our commitment to fully enacting and upholding our sanctions, and we continue to be watchful for sanctions evasion, circumvention, and backfilling.
The G7 Leaders underlined their common commitment during their summit in Elmau to stopping Russia from making money off of its aggression, to promoting stability in the world’s energy markets, and to minimising adverse economic spillovers, particularly on low- and middle-income nations.
The provision of such services would only be permitted if the oil and petroleum products are purchased at or below a price (“the price cap”) determined by the broad coalition of countries adhering to and implementing the price cap.
To deliver on this commitment, today we confirm our joint political intention to finalise and implement a comprehensive prohibition of services which enable maritime transportation of Russian-origin crude oil and petroleum products globally.
By only allowing service providers to continue doing business in relation to Russian seaborne oil and petroleum products sold at or below the price cap, the price cap is specifically intended to reduce Russian revenues and Russia’s ability to fund its war of aggression while limiting the impact of Russia’s war on global energy prices, particularly for low and middle-income countries.
Thus, this action would strengthen and extend the scope of already-enacted penalties, particularly the sixth package of measures from the EU, while guaranteeing coherence via a robust international framework.
[1] We applaud the European Union’s determination to investigate with international partners if it is possible to enact temporary import price controls as a means of containing the rise in energy costs.
We welcome all nations to contribute to the design of the price ceiling and to execute this significant step in keeping with our wide and continuing consultation with a diverse range of nations and key stakeholders.
We encourage those nations that still want to import Russian oil and petroleum products to make a commitment to doing so solely at rates at or below the price limit in order to maximise efficacy.
We reiterate that the price cap measure aims to support oil-importing nations worldwide by allowing continued access to Russian oil at or below the price cap for nations that continue such imports.
We also reiterate that we have taken steps to gradually remove Russian oil and products from our domestic markets.
The policy has the potential to be very helpful to nations, especially weak low- and middle-income nations that are struggling with rising oil and food costs that have been made worse by Russia’s aggressive conflict.
Along with our restrictive measures, we will also create focused mitigation strategies to guarantee that the most vulnerable and afflicted nations continue to have access to energy markets, including those from Russia.
We pledge to work quickly to finalise and put this measure into effect in our own jurisdictions using our individual domestic and legal systems as well as working with our partners.
We accept that in order for the EU to function, all 27 EU member states must agree.
Our goal is to timing the implementation to coincide with the corresponding measures’ deadlines in the sixth round of EU penalties.
Prior to implementation in each jurisdiction, the complete coalition will decide on the first price limit amount, which will be based on a number of technical inputs.
The price limit shall be made transparently and openly known to the public.
The efficacy and effects of the price limit will be continuously reviewed, and the price level may need to be changed as needed.
We anticipate that the price limit will be effectively implemented using a recordkeeping and attestation mechanism that applies to all relevant contract types. Our goal is to guarantee uniform application across all jurisdictions.
In practise, we would seek to minimise administrative cost on market players while limiting opportunities for the price cap system to be evaded.
In order to improve clarity and compliance and make it possible for trade to continue to flow at or below the intended price ceiling, we will continue to engage with a wide collection of nations and stakeholders with an eye toward final design and implementation.
We see the coalition creating a framework for cross-jurisdictional collaboration to assure compliance and make monitoring and supervision possible.
Once the price ceiling is in place, the coalition may decide to take further steps to guarantee its efficacy.
When necessary, the price limit action will be examined and reevaluated.
We continue to urge oil-producing nations to boost their output in accordance with the pledges made by the G7 Leaders at Elmau in order to reduce the volatility of the energy markets, and in this regard we applaud OPEC’s recent initiatives to do so in the face of a limited supply. We urge them to keep taking steps in this direction.
With partners devoted to advancing the effectiveness, stability, and openness of the energy markets, we will improve our cooperation.
The G7 Finance Ministers’ statement against Russia’s actions against Ukraine is welcomed by the Chancellor.
Nadhim Zahawi, Chancellor of the Exchequer, said:
Since Putin’s ruthless and unjustified invasion of Ukraine, the UK and its allies have placed very devastating sanctions on the Kremlin war machine, plunging Russia into a severe recession and rendering the bulk of its $640 billion in foreign currency reserves useless.
We have decided to go forward after a fruitful discussion in Washington with Secretary Janet Yellen and our G7 allies.
As Chancellor, this has been a top focus for me.
By prohibiting services like insurance and financial support from being provided to boats transporting Russian oil beyond a predetermined price threshold, we would limit Putin’s ability to use oil exports to pay his war.
We are united in our opposition to this heinous invasion and will do every effort to aid Ukraine in its struggle for independence, democracy, and freedom.
[1] On June 3, 2022, the sixth round of sanctions from the EU was approved. It added a provision to Article 3n of Council Regulation No. 833/2014 prohibiting EU operators from providing insurance or financing for the transportation of crude oil or petroleum products from Russia to third countries, particularly through marine routes. for further details.