Despite booming profits for Moscow, the US secretary of state insisted that the sanctions will hurt the Kremlin soon
US Secretary of State Antony Blinken told CNN on Sunday that an embargo on Russian gold exports will strip Moscow of around $19 billion in annual revenue. Pressed over the West’s failure to hurt the Russian economy with sanctions thus far, Blinken predicted that the effects will be seen next year.
The US, UK, Canada, and Japan will announce a ban on the import of Russian gold during the G7 Leaders’ Summit in Germany on Sunday, according to a statement from the British government.
Gold is “the second most lucrative export that Russia has, after energy,” Blinken told CNN’s Jake Tapper. “It’s about $19 billion per year, and most of that is within the G7 countries. Cutting that off, denying access to about $19 billion of revenue a year, that’s significant.”
It is unclear whether the rest of the G7 nations will sign on to the ban, with European Council President Charles Michel saying on Sunday that the EU would first need to determine whether it would be “possible to target gold in a manner that would target the Russian economy and not in a manner that would target ourselves.”
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G7 will reveal plan to ban Russian gold – UK
US President Joe Biden has said that a gold ban would impose “unprecedented costs on [Russian President Vladimir] Putin,” and UK Prime Minister Boris Johnson has claimed that it will “strike at the heart of Putin’s war machine.”
However, both leaders said the same about the multiple rounds of sanctions imposed on Russia by their countries and by their EU allies. Yet, while Biden promised in March to “crater” the Russian economy, Moscow is reporting record profits from oil and gas sales, and the Russian ruble currently stands at a seven-year high against both the dollar and the euro.
Meanwhile, inflation is at its highest level in 40 years in Europe and the US, and customers on both sides of the Atlantic are paying record high fuel prices. Despite agreeing on a Russian oil embargo last month, the EU is reportedly importing more Russian crude now than at any point over the last two months.
Russia will also still have the option to sell its gold to refiners, or to look for new buyers in China, India, or the Middle east, as it has done with its fossil fuels.
“The US said that Western sanctions against Russia would devastate its economy but that doesn’t seem to be happening. When are these sanctions going to start having the effect that the West and President Biden has promised?” Tapper asked Blinken.
“Everything that we’ve done from the start in imposing these unprecedented sanctions and export controls, it is having a profound impact on Russia,” Blinken replied, claiming that Russia now “can’t acquire what it needs to modernize its defense sector, modernize its technology, to modernize its energy exploration.”
“Already we’re seeing predictions that the Russian economy will shrink by 8-15% next year,” he stated, seemingly quoting the same figures Biden did earlier this month, which he attributed to unnamed “experts.”
The move would lead to extra costs of at least €860 million for Estonian companies
Estonian businesses that depend on goods and raw materials imported from Russia and Belarus would be expected to face extra costs of €860 million, according to the Foresight Centre, an independent think tank at Riigikogu, the Estonian parliament.
Replacing goods supplied from Russia and Belarus is complicated by the lack of surplus in Estonia’s domestic market, the think tank said in its latest report devoted to the issue.
“In certain categories, the goods from other countries are dramatically more expensive, although they can sometimes be also slightly more affordable,” said Foresight Centre expert Uku Varblane.
“However, this does not mean that production inputs from Russia and Belarus can always be easily replaced because they might have specific features that Estonian businesses have designed their products around,” the analyst added.
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Energy majors call on the French to save fuel
According to the brief report, replacing imports of fuels, wood products, metals and metal products, as well as salt and linen fabrics, would lead to the heaviest extra costs.
“For example, three quarters of the iron wire imported into Estonia comes from Russia or Belarus and finding replacements would mean an 81% increase in the cost,” Varblane warned.
The key imports from Russia and Belarus are fuels and natural resources (60%), wood and wooden produce (13.8%), metal products (9.2%), and chemical industry products (7.2%), according to the report.
The report highlights that last year Russia was Estonia’s second biggest trading partner after Finland, while Belarus was ranked tenth.
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Industry CEOs say France is at major risk of shortages and soaring prices
The chief executives of French energy companies TotalEnergies, EDF, and Engie have urged the country’s households and businesses to immediately lower consumption of fuel, oil, electricity and gas to be better prepared for the winter season.
“We must collectively take action on energy demand by reducing our consumption to recoup margins of maneuver,” a joint opinion piece issued by Jean-Bernard Levy, Catherine MacGregor and Patrick Pouyanne on Sunday reads.
According to the statement, published by Le Journal du Dimanche, potential price explosions threaten the “social cohesion” of the nation and have a dramatic impact upon consumer purchasing power.
“We will need them to manage the coming consumption peaks and to smooth out technical events or geopolitical shocks that we may have to face,” it said.
The bosses of the country’s largest energy groups highlighted that acting already this summer will make France better prepared ahead of winter. They believe that an immediate collective effort to boost energy efficiency would increase the purchasing power of households and reduce greenhouse gas emissions.
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France no longer receiving Russian pipeline gas
The call comes as France, like the rest of Europe, is trying to boost its gas reserves for next winter and, despite the drop in Russian gas deliveries, is targeting 100% storage levels by early autumn.
Earlier this month, French gas transmission system operator GRTgaz reported that it was no longer receiving Russian pipeline gas from Germany. The deliveries were substantially curtailed due to technical issues arising from Western sanctions. Russian energy giant Gazprom said that German energy equipment operator Siemens Energy had failed to return repaired gas pumping units for the North Stream pipeline from a maintenance facility in Canada due to the country’s sanctions on Russia.
Moreover, the company said that the Nord Stream 1 pipeline would stop delivering gas to Germany for 10 days in mid-July due to scheduled annual maintenance. The work will take place from July 11 to July 21.
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London says a ban on new Russian gold imports will be announced at the G7 summit
Britain and the US, along with allies such as Japan and Canada, are set to reveal a ban on new imports of Russian gold during the G7 Leaders’ Summit on Sunday, according to a statement by the UK government.
“This measure will have global reach, shutting the commodity out of formal international markets” and delivering a “huge impact” on Moscow’s potential to generate revenue across the world, the statement reads, adding that the step is underpinned by London’s central role in the metals trade.
Shipments between Russia and Britain have been reduced to almost zero since the Western allies introduced unprecedented sanctions on Moscow over its military operation in neighboring Ukraine. The London Bullion Market Association, which sets the standards for the market, removed Russian gold refiners from its accredited list in March.
Earlier this week, Reuters reported that EU leaders are considering gold as one of the targets for the next round of sanctions on Russia. The agency’s source, however, did not clarify whether the move would hit exports of gold, imports, or both.
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‘Impossible’ to sanction Russian gold, financier tells RT
The measure announced by London will apply to gold leaving Russia for the first time, and the US Treasury is expected to issue a ban on Tuesday, a person familiar with the plan said, as quoted by Bloomberg.
In April, Washington barred American individuals from engaging in gold-related transactions with Russia’s Central Bank, National Wealth Fund, and Finance Ministry.
While Western sanctions have largely closed off European and US markets to gold from the world’s second-biggest bullion miner, the G7’s move is expected to completely sever Russia from the world’s top two trading centers, London and New York.
According to UN Comtrade data, as cited by the agency, the $15 billion in Russian gold that arrived in London last year made up 28% of UK gold imports. Russia still has the option to sell the precious metal directly to refineries, or look for new buyers, such as China, India, and the Middle East, which have not supported the sanctions and are not part of the G7.
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