Will impose more sanctions on Russia: US treasury secretary Yellen in India

The US and its allies will look to impose further sanctions on Russia, US Treasury Secretary Janet Yellen said on Thursday, days after President Joe Biden’s visit to Ukraine, and the war in Europe entering its second year.

“We will continue to work with our partners to impose further sanctions on Russia,” Yellen said on the sidelines of the Group of 20 (G20) meeting of finance ministers and central bank governors (FMCBG).

Her statement was backed by some of the partners later in the day, the other members of Group of Seven (G7) — Canada, France, Germany, Italy, Japan, and the UK.

“We will continue to closely monitor the effectiveness of (existing) sanctions and take further actions as needed. We will also continue to work closely together and with our partners to enforce our sanctions and prevent any attempts to evade or circumvent sanctions. In this context, we call on other countries to join our sanctions on Russia,” said Japan Finance Minister Shun’ichi Suzuki, on behalf of G7 nations, at a separate media briefing.

With G7 nations pushing for further sanctions against Russia, differences are being ironed out with India and other G20 partners over the language of the official communiqué which will be issued at the end of the FMCBG meeting.

Business Standard has learnt from informed sources that India is averse to the use of the term ‘war’ in the communiqué, but softer terms like ‘crisis’ may not be acceptable to G7 members, all of whom are a part of G20 as well.

The G7 nations have committed $39 billion in additional aid and support to Ukraine in 2023, and Yellen said the US would provide $10 billion in support over the coming months.

“Russia’s economy has become increasingly isolated. Estimates indicate that nearly a million Russians may have left the country last year. This is putting downward pressure on its productive capacity,” said Yellen.

Yellen’s statement comes days after Biden made a surprise visit to Ukraine’s capital Kyiv. In her remarks, Yellen mentioned Russia 16 times and said that the International Monetary Fund (IMF) must move swiftly towards a fully financed programme for Ukraine.

“Continued, robust support for Ukraine will be a major topic of discussion during my time here in India,” she said.

“We have continued to see emerging markets (EMs) negotiate steep discounts on Russian oil — which keeps oil on the global market but sharply reduces Kremlin’s take,” added Yellen.

And therein lies the crux of the difference between the G20 nations over the language of the communiqué.

India’s Russian oil imports climbed to a record 1.4 million barrels per day (bpd) in January, up 9.2 per cent from December, with Moscow still the top monthly oil seller to New Delhi, followed by Iraq and Saudi Arabia, news agency Reuters had reported earlier.

Last month, Russian oil accounted for about 27 per cent of the 5 million bpd of crude imported by India, the world’s third-biggest oil importer and consumer, the data showed.

As reported by Business Standard earlier, India does not want discussions in Bengaluru to focus on further sanctions.

‘Global economy better placed now’

Interacting with the media, Yellen said the global outlook has improved over the past few months.

“While there are significant headwinds, it’s fair to say that the global economy is in a better place today than many predicted a few months ago. The challenges we face are real, and the future is always uncertain. But the outlook has improved since we gathered in the fall,” she said.

Yellen said the US economy remains resilient with moderation in inflation, easing of supply-chain pressures, and strengthening employment numbers.

She also said that the G20 nations need to work together to ease the debt overhang of some low- and middle-income nations.

“We will continue to push for all bilateral official creditors, including China, to participate in meaningful debt treatments for developing countries and EMs in distress. I will also be discussing international coordination on debt restructuring for middle-income countries,” she observed.

IMF Managing Director Kristalina Georgieva said on Wednesday that about 15 per cent of low-income countries are in debt distress and an additional 45 per cent at high risk of debt distress. Among emerging economies, about 25 per cent are at high risk and facing “default-like” borrowing spreads.

Yellen also said that the US will work with other nations on reforms in multilateral institutions.

“We are in the process of working with shareholders and management to evolve the World Bank. Over the next couple of days, I will be discussing how the G20 can build on the momentum at the World Bank for ambitious reforms. I’ll also discuss how we can accelerate the evolution of the regional development banks,” she said, adding that the US will put forward a candidate to take over the reins of World Bank from outgoing chief David Malpass.

Yellen also met Finance Minister Nirmala Sitharaman for a bilateral meeting on the sidelines of G20. Sitharaman and Yellen discussed cooperation on the evolution of multilateral development banks, strengthening of health-finance coordination, and sovereign debt restructuring.