After four months of Russia’s invasion, massive Western economic reprisal and military help to Ukraine have not impeded Vladimir V. Putin’s capacity or apparent willingness to conduct war, leaving the leaders of the world’s richest democracies scrambling to find new measures to prevent him.
At their meeting on Monday in the Bavarian Alps, President Biden and the other leaders of the Group of 7 were on the verge of adopting a bold but untested strategy to control the price of oil and limit the money that underwrites Mr. Putin’s war machine.
Russia unleashed a volley of missiles deep into Ukraine while the Ukrainian government was searching for new strategies to obstruct Moscow’s plans. These missiles struck civilian targets, including, according to Ukrainian authorities, a busy retail centre where at least 13 people were murdered. The leaders of the G7 nations issued the following statement in which they condemned the strike: “Attacks without discrimination on innocent people constitute a war crime.” There will be consequences for Russian President Vladimir Putin and others who are culpable.
It was the expectation of the leaders of the allied nations that economic sanctions would inflict such severe and rapid harm on the Russian economy that Vladimir Putin would come under economic and political pressure to end the conflict. Instead, Russia’s oil income is holding steady at a high level, the country’s internal opposition has been effectively silenced, and Mr. Putin is gloating over the fact that the West is the one suffering from high gasoline costs, which poses a potential threat to domestic political stability.
Economists forecast that Russia’s economy will contract by over 10 percent this year, and in December, an embargo imposed by the European Union on the majority of imports of Russian oil will go into force. Russia will undoubtedly continue to suffer in the future. In contrast, both Russia and Ukraine are fully aware of the fact that every day matters in a war of attrition.
On Monday, officials from the administration stated that President Biden would send advanced antiaircraft systems to Ukraine. At the same time, the North Atlantic Treaty Organization (NATO) announced plans to increase the number of troops stationed in Eastern Europe as well as significantly increase the number of troops that are ready for rapid deployment.
But the most innovative move came from the G7 meeting, where leaders were getting close to an agreement in principle to adopt price caps on Russian oil. This would limit the amount of money that could flow to the Kremlin as a result of the sale of Russian oil. Administration officials said this could be the most consequential move yet.
In spite of the sanctions that have been put in place so far, Russia’s oil income has increased this year with the skyrocketing costs of fuel, while consumers all over the globe have endured rising agony at the gasoline pump. While Russia’s exports to Western countries have decreased, the country’s sales to China and India have increased.
The United States has placed a restriction on oil imports from Russia, but the volume of those shipments was relatively low, and the European Union, which has traditionally been Russia’s largest client, has not yet implemented its own prohibition. Any kind of price restriction would have no impact whatsoever on those prohibitions.
A price limitation would enable Russia to continue selling oil in foreign markets but would drastically reduce the country’s earnings from such sales. Janet L. Yellen, who serves as Mr. Biden’s Treasury secretary, is the one who came up with the idea. She has been travelling the globe in recent weeks to convince other world leaders that putting a ceiling on oil prices is the most effective method to avoid a worldwide recession.
On Monday, European officials issued a warning that the implementation of the policy would be difficult, politically contentious, and time consuming if it is approved by the G7 leaders. The process of reaching a consensus in Europe to endorse an oil embargo came dangerously close to breaking the bloc’s unity against Russia. Officials and diplomats from the European Union warned that reopening that debate to introduce the price cap could face opposition from a number of E.U. countries.
A final deal would also involve extensive talks, which would likely need to include private corporations, such as insurers and big financial organisations, in addition to nations outside of Europe and the United States that receive oil from Russia.
Officials from the United States have said that negotiators should be able to hammer out the specifics, with the consent of the leaders of the G7; but, they have reluctant to provide a precise date.