The international Group of Seven will be reportedly weighing a possible move to ban all exports to Russia that don’t fall under special exemption at an upcoming leaders summit in Japan.
“Some of Ukraine’s key allies including the U.S. are considering moving closer to an outright ban on most exports to Russia, a potentially significant tightening of economic pressure on President Vladimir Putin over his war.
Group of Seven officials are discussing the idea ahead of a leaders summit in Japan in May, according to people familiar with the matter, and the aim would be to include European Union member states in the crackdown. The proposal is still being debated and could change, the people said.
The approach being discussed by diplomatic envoys would flip the existing sanctions regime around, with all exports banned unless exempted, the people said. Under the current criteria all exports are allowed unless sanctioned.
If G7 leaders endorse the move at the summit, exactly what would be excluded would then have to be agreed, with medicines and agricultural products — including food — very likely to stay exempted, one of the people said.
But there are potentially serious obstacles to implementation. To come into force in the EU, the new criteria would need to be adopted by all members, and that would set off a testy debate given the likely backlash from companies that still export goods to Russia, alongside the risk of retaliation by Moscow.
If a near-total embargo on exports is imposed, much of the remaining trade flows from these countries with Russia would evaporate. A spokesperson for the U.S. National Security Council declined to comment on the prospect of such a move.
So far sanctions have almost halved the value of EU and G7 exports to Russia, with limits on everything from electronics to luxury items. That still leaves $66 billion worth of goods from Europe, the U.S., Canada, and Japan going in, according to the Geneva-based Trade Data Monitor.
G7 members are concerned that is too big a benefit to Putin’s wartime economy, especially as Moscow finds ways around sanctions to bring in goods via third countries. The G7 and EU have imposed several rounds of penalties, some of which included a grace period before coming into effect.
Russia has responded to sanctions by imposing export bans of its own and periodically cutting energy supplies to Europe. The EU would be particularly vulnerable to restrictions on commodities like copper. And a near-total ban on exports to Russia could drive Moscow even closer to China as it seeks alternatives to sanctioned goods.
Moscow has stopped publishing figures on imports but several international monitors and governments track their exports to Russia and customs data.
Germany, Italy and Poland remain the top three European goods exporters to Russia, Trade Data Monitor data show. Across the G7, non-medicine and non-agriculture products that could be most affected include cars, chocolate, beer, footwear, flowers and make-up.
Even with the existing curbs, Russia has managed to import some sanctioned U.S. and European components via third countries. That is putting an increased focus by the G7 and EU on tackling sanctions circumvention, especially enhancing the monitoring of so-called dual-use goods that can serve either a military or civilian purpose.
That effort has involved applying diplomatic pressure on other countries, expanding restrictions to all goods that have been found in Russian weapons in Ukraine, and targeting companies that may be helping Moscow — intentionally or otherwise — to get around restrictions.
Earlier this month the U.S. sanctioned dozens of entities in twenty countries it accused of helping Moscow evade sanctions.
Ramping up the efforts to limit Putin’s economic reach is likely to be a key item at the G7 summit. Leaders are also expected to make progress on a mechanism to track and trace Russian diamonds across borders, eventually paving the way for restrictions on the trade, Bloomberg reported previously”. -Bloomberg
Implementing a total export ban would only serve to invite Russia to retaliate with restrictions on its own exports.
The move would also likely push Moscow closer to its Asian allies that fall under the proposed ban as well.
But, regardless of whether the sanctioneers go through with the supposed plans to ramp up economic constraints against the Kremlin, it’s likely only a matter of time before Russia determines to cut economic ties with the West entirely.
And, in light of the repeated counterproductive impact trade restrictions have had on Moscow, it seems more than probable that the nations targeted by Western economic embargoes will emerge wealthier and more self-reliant than they were dealing with their former trading partners.