US treasury secretary Janet Yellen on Thursday said Washington wants to see tougher and more effectively enforced sanctions against Moscow along with stronger condemnation of the war in Ukraine, and warned China of consequences if it helps Russia.
On the eve of the first anniversary of Russia’s invasion of Ukraine, Yellen arrived in Bengaluru for the first G20 finance ministers and central bank governors (FMCBG) meeting under the Indian presidency. The shadow of the Ukraine crisis loomed over the meeting that is expected to focus on the economic fallout of the conflict and ways to speed up global economic recovery.
Addressing a news conference after meeting finance minister Nirmala Sitharaman, Yellen said the economic costs imposed on Russia have the twin goals of degrading its military and squeezing revenues that can fund the war in Ukraine. The US has made it clear that providing material support to Russia, or assistance for any systemic evasion of sanctions, will be a “serious concern” for the US, she added.
“We have ongoing work on sanctions, working with our partners, we are seeking to strengthen sanctions and make sure we address violations of sanctions. And clearly the Russians are looking for ways [and] routes to backfill. We have deprived them of many channels through which they can obtain the materials that are critical for their defence efforts,” Yellen said in response to a question.
Further US sanctions and enforcement will focus on Russia’s efforts to backfill and obtain critical materials, she said.
“In meetings in which we will participate in the G20, I have always expressed my own and the US point of view that Russia’s behaviour is not only a clear violation of international law and unprovoked hostility,” she said, adding Moscow’s actions are one of the leading factors affecting food and energy in the world, and harming the global economic outlook.
She responded to another question on concerns about China’s deepening ties with Russia by saying: “With respect to sanctions and aid to Russia, we have made clear that providing material support to Russia or assistance with any type of systemic sanctions evasion would be a very serious concern to us.
“We will certainly continue to make clear to the Chinese government, and to companies and banks in their jurisdiction, about what the rules are regarding our sanctions and the serious consequences they would face for violating them.”
The issue of sanctions against Russia also figured at a meeting of G7 finance ministers and central bank governors that was joined virtually by by Ukrainian finance minister Sergii Marchenko.
A joint statement issued after the G7 meet said: We will continue to closely monitor the effectiveness of 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.”
During the meeting with Sitharaman, Yellen thanked India for its help in trying to resolve debt crises, particularly for Sri Lanka.
Sitharaman discussed perspectives on tackling global debt vulnerabilities, multilateral banks, crypto assets and health, a government statement said. The Just Energy Transition Partnership and possible takeaways for the two sides from the meeting were also discussed.
“Both sides agreed that lessons learnt from the Covid-19 pandemic should not be lost sight of and there is a need for enhancing preparedness for future pandemic type shocks,” the statement said.
“I am so proud & happy that all finance ministers and central governors of G20 countries who’ve come here to attend FMCBG Meeting can see the splendour of Karnataka displayed here through a live-running show in this video,” Sitharaman’s office tweeted, quoting her.
India has so far not joined any of the sanctions regimes against Russia and has also ramped up the purchase of discounted Russian crude. Prime Minister Narendra Modi had nudged Russian President Vladimir Putin during a meeting last September to end the conflict, saying “today’s era is not of war”.
The West has increased military and economic support for Ukraine amid reports of a possible fresh offensive by Russia. US President Joe Biden made a surprise visit to Kyiv to reiterate his country’s support for Ukraine.
Yellen said at the news conference that “continued, robust support” for Ukraine will be a major topic of discussion during her time in India, and the US will provide additional economic assistance of $10 billion to the war-torn country in the coming months.
The US partnered with a multilateral coalition of more than 30 countries since the early days of the war to impose severe economic costs on Russia, she said. “Our twin goals are to degrade Russia’s military-industrial complex and reduce the revenues that it can use to fund its war. We are seeing the impacts of these actions,” she said.
Yellen also spoke on the oil issue, which has been a sticking point for some Western governments since countries such as China and India continue to buy oil from Russia. She said the US and its allies implemented a cap on the price of Russian crude, which appears to have helped.
“So far, we see clear signs that our policy is working to reduce Russian revenues and stabilise global energy markets. Even as global oil prices have remained relatively stable over the past few months, Russian oil prices have fallen substantially. Last month, the Kremlin’s oil revenue was nearly 60% lower than in the immediate aftermath of the invasion,” she said, adding emerging markets have been negotiating steep discounts on Russian crude and keeping oil on the global market but sharply reducing Russian revenues.
Yellen said the US had so far provided more than $46 billion in security, economic and humanitarian aid to Ukraine and the economic assistance is making Ukrainian resistance possible by supporting critical public services and keeping the government running.
“Our military assistance includes key defensive weapons that Ukraine has asked for – such as the Patriot missile defence system…In the coming months, we expect to provide around $10 billion in additional economic support for Ukraine,” she said.
Over the past year, she said, Russia’s economy has become increasingly isolated, and US estimates show that close to a million Russians may have left the country in the past year. Sanctions imposed by the US are putting downward pressure on Russia’s production capacities.
The Russian military is struggling to replace more than 9,000 pieces of heavy military equipment it has lost since February 2022. “It has suffered production shutdowns at key defence-industrial facilities,” she said.
“As US Joe President Biden has said, we will stand with Ukraine in its fight – for as long as it takes,” she said. “We commend our allies for stepping up their direct assistance. And we believe it’s critical that the IMF move swiftly toward a fully financed programme for Ukraine – as they have said they will do.”
Yellen will join her G20 counterparts for two days of discussions that will shape the economic agenda for 2023 for the grouping of the world’s biggest economies.
