BENGALURU, India — US Treasury Secretary Janet Yellen said Thursday that sanctions were hurting Russia, as she and other G7 finance chiefs discussed further measures on the eve of the first anniversary of the Ukraine invasion.
“The way I see it, our sanctions have had a very significant negative effect on Russia so far. While by some measures the Russian economy has held up better than might initially have been expected, Russia is now running a significant budget deficit,” Yellen said in India.
Export controls were making it “extremely difficult” for Moscow to replenish its munitions, including repairing 9,000 tanks destroyed in the war, Yellen told reporters in Bengaluru.
“We see that it has led to an exodus of some of the most qualified scientists and entrepreneurs in the Russian economy, and an exodus of foreign investment. Russia is running down its holdings in its sovereign wealth fund so… the price cap that we have put on Russian oil is clearly substantially reducing Russia’s revenues,” she added.
Several countries, in particular China and India, have helped Moscow lessen the effect of sanctions by ramping up their purchases of Russian oil.
Moscow has also been able to sidestep some sanctions by importing goods from third countries.
Russia’s GDP contracted by 2.1 percent in 2022 according to official figures—far from the apocalyptic predictions from last year—although some Western countries say the statistics are fake.
“The Russian economy and management system turned out to be much stronger than the West believed,” President Vladimir Putin said on Tuesday, adding that the West wants to make ordinary Russians “suffer.”
‘Big new package’
Yellen also said the global economy was “in a better place” than predicted a few months ago in the wake of Russia’s invasion and the resulting explosion in prices for fuel, food and other essentials.
Her comments came before a meeting of Group of Seven finance ministers in Bengaluru later on Thursday to discuss further sanctions and more financial help for Ukraine.
A senior US official said last week that the United States and its G7 allies planned to unveil “a big new package of sanctions” around the February 24 anniversary, including measures to crack down on the evasion of existing sanctions.
G20 finance chiefs and central bank heads are also due to meet on Friday and Saturday in Bengaluru to discuss the dire economic effects of the war and possible debt relief for poorer nations.
About 15 percent of low-income countries are in “debt distress,” the International Monetary Fund has said. A record 349 million people in 79 countries face “acute food insecurity.”
Any discussion on Ukraine is awkward for host India, which has not condemned the invasion. India wants to avoid the word “war” in any final statement, Bloomberg News reported.
It was unclear what level of involvement Russia would have in the wider G20 meeting. German officials said no high-ranking Russian representative will be present.
A meeting of G20 foreign ministers in New Delhi on March 1 and 2 could be tense, with Russian Foreign Minister Sergei Lavrov expected to attend alongside US Secretary of State Antony Blinken. — AFP
