G-7 leaders stop short of new energy sanctions; Biden heads to NATO summit

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MITTENWALD, GERMANY — Leaders from the Group of Seven wealthiest democracies said they would urgently explore price caps on Russian oil and gas “to prevent Russia from profiting from its war of aggression.” However, they did not impose any new energy sanctions, as the summit concluded in Germany.

Russia’s ongoing assault on Ukraine dominated discussions at Schloss Elmau, a castle hotel nestled against the dramatic backdrop of southern Germany’s Bavarian Alps, with intense discussions between the United States, Britain, Canada, France, Germany, Italy and Japan over how to curb Moscow’s ability to finance the war through selling fossil fuels.

The G-7 leaders also agreed to contribute $4.5 billion to address global food security, with over half the money coming from the United States.

“We have a period of uncertainty before us, it will be challenging, and that’s why decisiveness is important,” Chancellor Olaf Scholz said in closing remarks, saying that President Vladimir Putin “must not win the war” and the costs of continuing it would be high.

However, the final communique did not include any new sanctions. Instead it said that G-7 countries would instruct ministers to “urgently” look for ways to impose price caps on Russian oil and gas. In addition to hurting Russia financially, the caps are also seen as a way to bring down surging energy prices.

Currently, some countries that are arming and backing Ukraine in its defense against Russia’s assault are simultaneously sending billions of dollars to Moscow in energy payments. Russia earned$66.5 billion from fossil fuel exports during the first two months of the war, according to a study published by the Centre for Research on Energy and Clean Air, with Germany alone paying more than $9.5 billion.

“We reaffirm our commitment to phase out our dependency on Russian energy,” the final communique read. “In addition, we will explore further measures to prevent Russia from profiting from its war of aggression.”

The oil cap, which was floated by the United States ahead of the meeting, is complicated by the fact that oil is sold on the open market and Russia could look elsewhere for buyers. Negotiators have therefore been looking for ways to enforce the cap though Western dominated insurance and shipping industries, hoping to leverage them to make it difficult to transport Russian oil that has been purchased outside the cap.

G-7 leaders will consider a ban on services “which enable transportation of Russian seaborne crude oil and petroleum products globally, unless the oil is purchased at or below a price to be agreed in consultation with international partners.”

A cap on natural gas prices is considered easier to implement given the pipeline infrastructure means that Russia can’t sell gas earmarked for Europe to alternative buyers. On gas, leaders agreed to “seek to develop solutions that meet our objectives of reducing Russian revenues from hydrocarbons,” the text continued.

As the meeting in Germany wrapped up, President Biden flew directly on to Madrid, where he and other NATO heads of state and government will gather for another three-day summit focused on urgent military support for Ukraine as well as the alliance’s longer-term strategy.

The meeting comes a day after NATO Secretary General Jens Stoltenberg announced that the number of alliance forces kept at a high readiness level will increase sharply — to more than 300,000 troops from 40,000 — in response to Russia’s invasion of Ukraine. The expansion is part of what Stoltenberg called the “biggest overhaul of our collective defense and deterrence since the Cold War.”

In Madrid, the world will get a better sense of how the overhaul might look. NATO leaders and officials will discuss a more responsive force model, debate plans to bolster NATO’s eastern flank and release a new strategy document, diplomats said. Allies are also expected to announce additional financial and military support for Ukraine.

Stoltenberg said at a news conference Monday that the summit will be “transformative.” He alluded to a “new security reality” and “a fundamental shift in NATO’s deterrence and defense.”

In addition to addressing the threats from Russia, those gathered will consider the security implications of China’s rise. NATO’s new strategy document will for the first time outline the alliance’s view on the challenges that Beijing poses to “our security, interests and values,” as Stoltenberg put it. Diplomats said the exact language to be used is still being debated.

In another first, the leaders of Australia, New Zealand, Korea and Japan will attend the summit. Also participating will be Sweden and Finland, close NATO partners who remained officially militarily nonaligned until Russia’s unprovoked invasion of Ukraine pushed them ever-closer to the alliance. Stockholm and Helsinki applied to join the alliance last month, only to have Turkey block the start of the accession process citing opposition to Sweden’s stance on Kurdish separatist groups.

Weeks of diplomacy have yet to resolve that standoff, though NATO officials and diplomats insist they are confident things will ultimately move forward. Swedish Prime Minister Magdalena Andersson, Finnish President Sauli Niinisto and Turkish President Recep Tayyip Erdogan will meet in Madrid, according to Finnish officials.

The summit will be closely watched not only for news on money and weapons to Ukraine, but as a sign of Western resolve as the war enters its fifth month.

Russia’s full-scale invasion has reinvigorated transatlantic ties in many ways, with the U.S. and European allies working closely on sanctions and military support for Ukraine. But with every passing month, key issues get more complicated. The question of if and how to pursue a peace deal, for instance, is becoming divisive within the alliance.

Retired U.S. Army Lt. Gen. Ben Hodges, a former commander of U.S. Army Europe, said NATO’s challenge is to show Russia that it has not lost momentum. “The Russians are just so confident that we cannot stay together, that we can’t sustain what we are doing through a long hot summer,” he said.

Because of this, Hodges added, allies are focused on sending a message to Russia that NATO has “an unmistakable commitment to making sure that Ukraine wins, not just survives.”

Florian Neuhof in Berlin and Rick Noack in Mittenwald contributed reporting.

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