G7 nations to announce ban on import of Russian gold

US President Joe Biden said the leaders of the world’s wealthiest nations will announce the ban during the G7 summit in Munich.

German Chancellor Olaf Scholz (left) welcomed US President Joe Biden (right) at Bavaria's Schloss Elmau castle on the day of G7 leaders summit.
German Chancellor Olaf Scholz welcomed US President Joe Biden at Bavaria's Schloss Elmau castle on the day of G7 leaders' summit [Leonhard Foeger/Pool/Reuters]

The United States has said the Group of Seven (G7) nations will ban the import of Russian gold with the aim of tightening sanctions screws on Moscow, which on Sunday carried out missile strikes on Ukraine’s capital Kyiv after making territorial gains in the eastern Luhansk region.

“Together, the G7 will announce that we will ban the import of Russian gold, a major export that rakes in tens of billions of dollars for Russia,” President Joe Biden said as the leaders of the world’s wealthiest nations gathered in the Bavarian Alps.

The measure was initially flagged by the United Kingdom as joint action being taken along with fellow G7 members Canada, Japan and the US.

However, a senior US administration representative who spoke on condition of anonymity told reporters the G7 would make an official announcement on the gold import ban on Tuesday.

Al Jazeera’s James Bays, reporting from the G7 summit, said the first session on Sunday will be focusing on the global economy and the “very worrying picture” as the conflict in Ukraine drives up inflation and energy prices.

Bays added the sanctioning of Russian gold has been hailed as one of the summit’s achievements and is likely to go ahead. But mindful of their own economies, G7 leaders are unlikely to greenlight any additional sanctions, “particularly gas imports from Russia to Europe”, he said.

Meanwhile, Ukrainian Foreign Minister Dmytro Kuleba on Sunday called on G7 countries to respond to the new missile attack on Kyiv by imposing further sanctions on Russia and providing more heavy weapons to Ukraine.

“This 7 y.o. Ukrainian kid was sleeping peacefully in Kyiv until a Russian cruise missile blasted her home. Many more around Ukraine are under strikes. G7 summit must respond with more sanctions on Russia and more heavy arms for Ukraine,” Kuleba said on Twitter.

Gold exports major source of revenue for Russia

Gold exports are a major source of revenue for Russia in terms of their ability to transact with the global financial system.

Last year, they were worth 12.6 billion pounds ($15.45bn) and wealthy Russians have been buying bullion to reduce the financial effect of Western sanctions.

The clampdown is likely to be the most meaningful economic measure against Moscow announced at the G7’s three-day meeting.

Sanctions against Moscow are starting to eat deep into Russia’s economy and President Vladimir Putin’s long-term ability to continue the invasion of Ukraine, which is now in its fifth month.

The London bullion market had already suspended six Russian refineries in action announced on March 7.

British Prime Minister Boris Johnson said in a statement that the gold ban “will directly hit Russian oligarchs and strike at the heart of Putin’s war machine”.

“We need to starve the Putin regime of its funding. The UK and our allies are doing just that,” he said.

Western nations imposed widespread sanctions on Moscow targeting its finances, including freezing its central bank assets to block access to foreign currency reserves.

European Union leaders agreed earlier this month to cut 90 percent of oil imports from Russia by the end of this year, cutting off a vital source of funding for Moscow.

The G7 summit provides an opportunity for German Chancellor Olaf Scholz to demonstrate more assertive leadership in the wake of the Ukraine crisis.

Scholz promised a revolution in German foreign and defence policy after Russia’s invasion in February, pledging to bolster the military and send weapons to Ukraine. But critics have since accused him of dragging his feet and sending mixed messages.

“The summit must send not only the message that NATO and the G7 are more united than ever, but also that the democracies of the world stand together against Putin’s imperialism, just as they do in the fight against hunger and poverty,” Scholz told German parliament this week.

Biden told Scholz on Sunday that the West must stay united against Russia’s invasion of Ukraine.

“We have to stay together,” Biden told Scholz at a meeting ahead of the G7 summit. Russian President Vladimir Putin had been hoping “that somehow NATO and the G7 would splinter,” Biden said. “But we haven’t and we’re not going to.”

Source: Al Jazeera and news agencies