The Group of Seven tightens sanctions against Moscow, and Russian gold is within the target range

The United States announced the start of sanctions approved by the Group of Seven summit targeting the Russian army and gold, at a time when Russia has apparently failed to pay off its foreign debt, for the first time since the Bolshevik revolution in the country in 1917.

The decision of the Group of Seven to ban Russian gold as part of efforts to intensify sanctions on Moscow and cut funding for its invasion of Ukraine, more than four months after the start of the war, led by Russian President Vladimir Putin described as a special military operation.

The US Treasury explains that Washington and its allies today, Tuesday, at the summit in Germany, approved a ban on gold imports from Russia, in addition to the imposition of new sanctions on its defense industry.

The US Treasury said in a statement that “the actions taken today (…) target Russia’s capabilities to develop and deploy weapons and technologies used in Vladimir Putin’s war against Ukraine.”

The United States says Russia is using gold to support its national currency, as a way to circumvent the impact of sanctions imposed on it, and one way to do so is by exchanging gold for foreign currencies.

“important matter”

Experts in the financial and business sector believe that a small number of countries will implement a ban on Russian gold, and therefore the step taken by the Seven Summits on this gold is nothing more than a symbolic measure, while others, including experts in the administration of US President Joe Biden, confirmed that the imposition of a ban on Russian gold On Russian gold imports will target its ability to deal with the global financial system.

US Secretary of State Anthony Blinken told CNN last Sunday, “Given that gold is Russia’s second most profitable export commodity after the energy sector, and that nearly 90% of revenue comes from Among the G7 countries, which these countries banned from importing gold from Russia will deprive them of about $ 19 billion annually, “and that’s a major issue,” he said.

And Blinken adds: The ban on Russian gold will deprive Moscow of getting what it needs (money) to modernize its defense sector, to modernize its technology and to fund the exploration of new energy sources.

Moscow began increasing its gold purchases in 2014, when Washington imposed sanctions on Russia over its invasion of Crimea, and the country now has gold reserves estimated at between $ 100 billion and $ 140 billion, which is about 20 percent of the Central Bank’s reserves. make out. Russia, according to US officials.

Monitor potential violations

Russia will still be able to sell gold to other countries outside the jurisdiction of the Group of Seven, but the decision to ban the import of Russian gold “will affect its ability to harvest export earnings,” said Chris Weaver, an expert on Russia. economics at Micro Advisory.

Weaver adds, “This is the high level of export earnings that Russia is supporting and supporting its economy since sanctions were imposed on it after (its invasion of Ukraine) last February 24.”

And in the context of monitoring possible violations of economic sanctions imposed on Moscow, Swiss customs officials announced last Friday that they had about 3 tonnes of Russian origin gold, worth 194 million Swiss francs ($ 202 million) that Switzerland was exporting from Britain entered, tracked down. last month.

It is noteworthy that the United States, in cooperation with the Group of Seven and the European Union, imposed additional sanctions against Russia last March, including Russia’s gold reserves.

prohibition and joint action

“The leaders of the Group of Seven and the European Union will continue to work together to limit Russia’s ability to deploy its international reserves to support the Russian economy and to finance Putin’s war, including by making it clear. that any transaction involving gold related to the Central Bank of the Russian Federation is covered, ”said a statement issued by the White House at the time, with the current sanctions.

The U.S. Treasury, in turn, recently issued guidance that “persons, including gold traders, distributors, wholesalers, buyers, individual traders, refiners and financial institutions, are generally prohibited from engaging in or facilitating prohibited transactions, including those associated with gold. that banned persons have an interest in it. “

Target “the heart of Putin’s war machine”

In turn, British Prime Minister Boris Johnson, in the context of emphasizing the need to ban the import of Russian gold, said: “These measures will directly hit the rich of Russian power and target the heart of Putin’s war machine.”

Johnson added in a statement issued Sunday, “Putin is wasting his dwindling resources on this barbaric and futile war. He is feeding his vanity at the expense of the Ukrainian and Russian people,” according to Johnson’s description.

In a related context, a White House official claims, in statements to reporters, that banning the import of Russian gold is another way to cut the relationship between the Russian economy and the global financial system.

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