G7 leaders vow new Russia sanctions and reboot infrastructure plan that counters Chinese influence

Mon 27 Jun 2022
Posted by: Phillip Adnett
Trade News

G7 Annual Meeting

G7 leaders have vowed to impose new sanctions on Russian imports of military technology at their annual summit in Germany.

They also vowed to target new measures against individuals found guilty of war crimes and who exacerbated “global food insecurity,” the FT reports.

Oil, gas and gold

According to another FT report, the G7 is trying to agree a price cap on oil exports from Russia to limit the benefits of the soaring price of crude to Moscow, while cushioning the impact of higher energy prices.

Italian PM Mario Draghi is canvassing for a similar cap in gas prices paid to Russia, reports the Guardian, while the US and UK want to ban gold exports.

Gold sanctions

Boris Johnson said a ban by G7 countries on Russian gold would “directly hit Russian oligarchs and strike at the heart of Putin's war machine” reports EuroNews.

The value of gold exports has increased since the war began as wealthy Russians seek to skirt sanctions.

Gold is the top Russian export after energy, worth almost $19bn or about 5% of global gold exports in 2020, according to the White House. Around 90% was consigned to G7 countries with over 90%, or nearly $17bn, exported to the UK.

New infrastructure

Leaders also pledged to raise $600bn to fund infrastructure projects in the developing world.

The move is seen as a counter to China’s Belt-and-Road plan, which has ploughed trillions of dollars into infrastructure projects as a way to increase its influence globally.

The BBC reports that the G7 programme, called the Partnership for Global Infrastructure and Investment (PGII), is a relaunch of a scheme announced at last year’s G7 talks in Cornwall.

‘Better options’

President Biden did not mention China in his announcement of the initiative, but said: “We’re offering better options for people around the world,” Politico reports.

Some critics have said that China’s Belt and Road plan has heaped debt on countries and left them in a “debt trap”.

Joint effort

The US aims to raise $200bn over the next five years, adding to the €300bn announced by the EU.

Along with contributions from the other members, the overall target is to build a $600 billion scheme.

The project aims to tackle climate change, improve global health, achieve gender equity and build digital infrastructure.