Biden says G-7 must stick together; gold sanctions to target Russian oligarchs

SCHLOSS ELMAU (Germany) • US President Joe Biden told allies "we have to stay together" against Russia, as world leaders met yesterday at a Group of Seven (G-7) summit in the Bavarian Alps that will be dominated by war in Ukraine and its painful impact on food and energy supplies across the globe.

At the start of the meeting, four members of the G-7 rich nations moved to ban imports of Russian gold as part of efforts to tighten the sanctions squeeze on Moscow and cut off its means of financing the invasion of Ukraine.

Chided by Ukraine for not going far enough to punish Russia more than four months into the war, G-7 leaders were also having "really constructive" talks on a possible price cap on Russian oil imports, a German government source said.

At the start of a bilateral meeting, Mr Biden thanked German Chancellor Olaf Scholz for showing leadership on Ukraine and said Russian President Vladimir Putin had failed to break their unity. Mr Scholz has faced criticism at home and abroad over his handling of Russia's invasion of Ukraine.

"We can get through all of this and come out stronger," Mr Biden said. "Because Putin has been counting on it from the beginning that somehow the Nato and the G-7 would splinter. But we haven't and we're not going to."

Mr Biden yesterday also announced a G-7 project to rival China's formidable Belt and Road Initiative by raising some US$600 billion (S$834 billion) for global infrastructure programmes in poor countries.

Unlike the Chinese version, reliant on state-controlled funds and companies, he said the G-7 governments will provide only limited amounts of money and incentivise massive private-sector investments. In this capitalist versus communist scenario, US officials say, recipient countries will be able to avoid the alleged debt traps and other tactics used by the Chinese to extend their physical investments into a political and financial grip on vulnerable nations.

Britain said the ban on Russian gold imports was aimed at wealthy Russians who have been buying safe-haven bullion to reduce the financial impact of Western sanctions. Russian gold exports were worth £12.6 billion (S$21.5 billion) last year. Britain, the US, Canada and Japan will ban gold imports. France also supported the move.

"The measures we have announced today will directly hit Russian oligarchs and strike at the heart of Putin's war machine," British Prime Minister Boris Johnson said in a statement. "We need to starve the Putin regime of its funding."

On the oil price cap and on the gold import ban, European Council President Charles Michel said the issue would need to be handled carefully or risk backfiring.

"I'm careful and cautious, we are ready to go into the details," he said. "We are ready to take a decision together with our partners, but we want to make sure that what we decide will have a negative effect (on Russia) and not a negative effect for ourselves."

As missiles struck the Ukrainian capital Kyiv yesterday, hitting an apartment block and a kindergarten, Mr Biden called the strikes acts of "barbarism".

The summit takes place against an even darker backdrop than last year, when the leaders of the G-7 countries - Britain, Canada, France, Germany, Italy, Japan and the US - met for the first time since the start of the Covid-19 pandemic.

As delegates arrived at Schloss Elmau, a castle at the foot of the Wetterstein mountains, they were greeted with flowers as Bavarian mountain riflemen stood to attention in the sunshine.

Leaders are expected to discuss options for tackling rising energy prices and replacing Russian oil and gas imports. They also want to avoid sanctions that could stoke inflation and exacerbate the cost-of-living crisis affecting their own populations.

REUTERS