Russia's energy, trade under fire as G-7 eyes stricter sanctions
The logo of the G-7 Finance Ministers and Central Bank Governors' meeting is displayed at Niigata station, ahead of the meeting, Niigata, Japan, May 10, 2023. (Reuters Photo)


Leaders of the G-7 countries intend to enhance sanctions on Russia during their summit in Japan this week, with proposed measures focused on targeting Russian energy sectors and exports contributing to Moscow's war efforts, according to officials with direct knowledge of the discussions.

New measures announced by the leaders during the May 19-21 meetings will target sanctions evasion involving third countries, and seek to undermine Russia's future energy production and curb trade that supports Russia's military, the people said.

Separately, U.S. officials also expect G-7 members will agree to adjust their approach to sanctions so that, at least for certain categories of goods, all exports are automatically banned unless they are on a list of approved items.

The Biden administration has previously pushed G-7 allies to reverse the group's sanctions approach, which today allows all goods to be sold to Russia unless they are explicitly blacklisted.

That change could make it harder for Moscow to find gaps in the sanctions regime.

While the allies have not agreed to apply the more-restrictive approach broadly, U.S. officials expect that in the most sensitive areas for Russia's military G-7 members will adopt a presumption that exports are banned unless they are on a designated list.

The exact areas where these new rules would apply are still being discussed.

"You should expect to see, in a handful of spaces, particularly relating to Russia's defense industrial base, that change in presumption happen," said a U.S. official who declined to be named.

The precise language of the G-7 leaders' joint declarations is still subject to negotiation and adjustment before it is released during the summit. The G-7 comprises the United States, Japan, Canada, France, Germany, Italy and the United Kingdom.

The G-7 leaders' action on Russia comes as Ukraine's Western allies hunt for new ways to tighten already restrictive sanctions on Russia, from export controls to visa restrictions and an oil price cap, which have put pressure on Russian President Vladimir Putin but not halted the full-scale invasion that started over a year ago.

Some U.S. allies have resisted the idea of banning trade broadly and then issuing category-by-category exemptions.

The European Union, for instance, has its own approach and is also currently negotiating its 11th package of sanctions since Russia invaded Ukraine, with the bulk focused on people and countries circumventing existing trade restrictions.

"The sometimes-discussed approach of 'we ban everything first and allow exceptions' will not work in our view," said one top German government official. "We want to be very, very precise and we want to avoid unintended side effects."

Meanwhile, any change in language, including language specifying that certain trade is banned unless specifically exempted, by the G-7 leaders may not necessarily lead to more bans immediately or indeed any change in Russia's posture.

"At least on Day One, that change in presumption doesn't change the substance of what's allowed, but it matters for the long term trajectory of where we're going and the restrictiveness of the overall regime," the U.S. official said.

Ukraine, backed by Western arms and cash, is expected to launch major counteroffensive operations in the coming weeks to try to recapture tracts of its east and south from Russian forces.

Ukrainian President Volodymyr Zelenskyy has been in Europe this week for meetings with Pope Francis and leaders from France, Italy and Germany. He is expected to address G-7 leaders, either virtually or in person, during their summit in Hiroshima, the officials said.

Former Russian President Dmitry Medvedev said last month a G-7 move to ban exports to the country would cause Moscow to terminate a Black Sea grain deal that enables vital exports of grain from Ukraine.

Food security in the aftermath of the war is also expected to be a major topic at the G-7.