MODERATOR: All right. So, in the interest of time, we’re going to go ahead and get started. First, you know, I’m sorry that we had to move the time up — just, you know, shifting schedules that we just couldn’t plan for. So I’m — again, I’m sorry, and thank you for joining so early this morning.
So we’re going to preview some announcements that are going to be coming as part of a coordinated G7 announcement on Tuesday, but we wanted to give you a sense of where things are and also a laydown of some new U.S. actions.
This call is on background. It is attributable to a “senior administration official.” And the contents of the call are embargoed until 10:00 a.m., Germany; 4:00 a.m., U.S.
So, with that — and, sorry, for your awareness but not for reporting, our speaker is [senior administration official].
So, [senior administration official], I’ll turn it over to you. And then we’ll try to take as many questions as we can.
SENIOR ADMINISTRATION OFFICIAL: Great. Thanks, Saloni.
And thanks, everyone, for joining. We had a packed day at the G7 yesterday, and we are now headed into day two.
President Biden and the whole team here have been working around the clock to leverage the fact that close to 50 percent of the world’s economy is in one place and put forward further efforts to support Ukraine, hold Russia accountable, and manage the impacts of Putin’s war on the global economy.
I want to take just a few minutes to preview some of the efforts the U.S. will be taking in coordination with the G7. But before I get to that, I want to start with setting some context.
As you all know, the United States has rallied over 30 allies and partners around the world to impose drastic historic costs on Russia.
It was reported overnight that Russia defaulted on its sovereign debt for the first time in more than a century.
So, in the span of a few months, U.S. exports to Russia, including of critical technology inputs that Putin needs to maintain his military, those have decreased 97 percent. Russia’s imports of goods from around the world could fall by as much as 40 percent this year.
Factories across Russia are struggling to maintain production. Russia’s GDP is likely to fall by double digits this year, and inflation is rising to over 20 percent.
So, just by way of context, and I think this morning’s news around — around the finding of Russia’s default for the first time in more than a century situates just how strong the reactions are that the U.S., along with allies and partners, have taken, as well as how dramatic the input — the impact has been on Russia’s economy, both today and cumulating — accumulating across time.
Today, the United States will continue — pardon me — the United States will continue to increase pressure on Putin. That’s why today we’re announcing:
First — and on this first one, you know, we’re still in final discussions with other G7 counterparts, working to finalize this, but we’re very close to a place where G7 leaders will have decided to urgently direct relevant ministers to develop mechanisms to set a global price cap for Russian oil in shipments to countries outside of the U.S., EU, the UK, and the broader G7.
The goal here is to starve Russia — starve Putin of his main source of cash and force down the price of Russian oil to help blunt the impact of Putin’s war at the pump.
As I’ve said repeatedly, we have dual objectives here. The dual objectives of G7 leaders have been to take direct aim at Putin’s revenues, particularly through energy, but also to minimize the spillovers and the impact on the G7 economies and the rest of the world.
And G7 leaders are going to acknowledge those two objectives and also acknowledge that the path forward is to urgently direct ministers to work on achieving a price cap, which can, in our judgement, best achieve both of those objectives simultaneously.
Secondly, G7 leaders will align and expand targeted sanctions to further restrict Russia’s access to key industrial inputs, to services and technologies produced by our economies, particularly those supporting Russia’s armament industrial base and technology sector.
On Tuesday, the United States Departments of State and Treasury will aggressively target Russian defense supply chains by imposing blocking sanctions on major state-owned defense enterprises, in addition to defense research organizations, and dozens of other defense-related entities and individuals, and limit Russia’s ability to replace the military equipment it has already lost during its brutal war against Ukraine.
We will align on using tariffs on Russian goods to help Ukraine. Earlier this year, G7 leaders committed to strip Russia of “most favored nation” trading status, which guaranteed low tariff rates for Russian goods sold globally.
President Biden and other G7 leaders will seek authority to use revenues collected by new — any new tariffs on Russian goods to help Ukraine and to ensure that Russia pays for the cost of its war.
President Biden is also announcing that, pursuant to Congress’s revocation of trade — Russia’s trade status in the U.S., the U.S. will implement a higher tariff rate on more than 570 groups of Russian products worth approximately $2.3 billion.
These measures will restrict Russia’s ability to benefit economically from sales to the U.S. market and are carefully calibrated to impose costs on Russia, and are not expected to have impacts on U.S. supply chain or raise costs to U.S. consumers.
G7 Leaders will decide to impose sanctions on those responsible for human rights abuses, including war crimes, exercising illegitimate authority in Ukraine, and involved in Russia’s tactics to steal Ukrainian grain or otherwise profit illegitimately from the war.
On Tuesday, the U.S. Departments of Treasury and State will implement blocking sanctions on private military companies operating in Ukraine, Russian military units that have been credibly implicated in human rights abuses or violations of international humanitarian law in Ukraine, and Russia-installed senior officials in contested areas, including ministers and mayors of contested cities.
State will impose visa restrictions on approximately 500 officials for threatening or violating Ukraine’s sovereignty, territorial integrity, or political independence, or suppressing dissent in Russia.
And lastly, you will see significant G7 — significant G7 commitment to help Ukraine cover its short-term budgetary shortfalls, including a $7.5 billion commitment from the United States from the recently passed second supplemental.
With that, I will go ahead and stop and take any questions from the group that we have time for. Thank you.
MODERATOR: Great, thank you. If you have a question, could you please raise your hand?
All right, let’s go to Jim from the Times. Jim, can you ask your question, please?
Q Yes. Thanks so much for doing this. [Senior administration official], can you tell us more about how the price cap is shaping up? Who all would implement it? How might it work? I know you haven’t figured out the details yet. But — and, sort of, what would the — a potential price cap be that is in the ballpark of what you guys are discussing?
SENIOR ADMINISTRATION OFFICIAL: Thanks, Jim. So, again, I would take a step back and say: What leaders are likely to articulate here is a set of shared objectives. Those objectives are denying Russia’s energy revenues, their resources to continue to wage war, and also to minimize the spillovers on the rest of the economy, minimize the disruption in global energy markets, minimize the impact for consumers in the United States and around the world.
What is been — what is likely to be further acknowledged here is that while we are — in the U.S., the EU, Canada, the UK — implementing our own oil embargos on Russian oil, we collectively have a set of tools that can go to the services that are provided to allow Russian oil to be transported elsewhere in the world.
And by zeroing in on those services and the way in which they’re provided — and particularly, potentially, through the mechanism of a price gap — there’s an ability to achieve both of those objectives simultaneously.
What leaders are likely to do is task the relevant ministers, including finance ministers across the G7, to work intensively with other partners around the world, to work intensively with the private sector in the period of time ahead to urgently take steps to determine how to design and implement such a mechanism and, again, design and implement such a mechanism with those two shared objectives squarely in mind.
MODERATOR: Great, thank you. Let’s go to Zeke Miller from the AP. What’s your question, please?
Q Thanks for doing this. [Senior administration official], can you just clarify a little bit — so it sounds like you’re saying there is an agreement in principle but not an agreement on substance on the price cap and — including no details on how it would actually work. How long would it take to actually come up with those details to be in a place where this would be able to be implemented?
And then also, what do you predict the impact would be, if any, of this action on the price of U.S. energy and U.S. consumer prices?
SENIOR ADMINISTRATION OFFICIAL: Yeah, so I’d say a couple of things. You know, one: Yes, what we’re likely to achieve here is leaders aligning around those shared objectives, leaders acknowledging that a price cap on Russian oil implemented through the services that G7 economies provide collectively to transport Russian oil elsewhere in the world — that that is a very promising avenue to pursue to achieve our shared objectives — again, denying Putin revenue, minimizing the disruption in global energy markets, providing greater stability and supply in global energy markets.
You know, there are — this, as you might imagine, requires a great deal of coordination, a great deal of effort across a number of different ministries in the G7. It requires a great deal of coordination with international partners. That’s what the statement recognizes. That’s what it tasks ministers to go do urgently.
And we would expect, in the coming period of time, that we will have — that we will get — that we will take steps towards identifying the precise mechanisms through which this would be achieved.
And in terms of impact on consumer prices, you know, I don’t want to make any forecasts. Again, I think what we have been focused on is how do we achieve these dual objectives. And importantly, you know, one of those dual objectives is ensuring stability in global energy markets, ensuring supply on global energy markets. We think this is a tool that is going to do exactly that: provide additional clarity that there will be supply and stability in global energy markets.
And so we are of the belief that this is a tool that is going to — that is — while I don’t want to make any forecasts — is going to achieve those objectives of providing stability, providing greater certainty, and providing greater comfort around supply in global energy markets in ways that that we think will have the intended effect with respect to energy prices.
MODERATOR: Great. Thanks, [senior administration official]. So I think we just have time for one more, and then I know you have to run.
So let’s do Andrea Shalal from Reuters. What’s your question, please?
Q Hi. Hey, thanks so much for doing this. [Senior administration official], can you just sort of explain to me how much, you know, further this takes it? There’s 30 countries already doing sanctions. This set of measures that G7 leaders are expected to agree to, does it take you to, sort of, 90 percent of what’s possible? You know, can you just sort of characterize what this is — stepping back, zooming out — in terms of ratcheting up pressure on Russia?
And then if I could just ask you with regard to the price cap and the transportation of oil and — I’m wondering whether your conversations, you know, with other countries that have been the so-called fence sitters on this and have continued to draw oil — are you making headway? Have any substantial countries — say, India — agreed? Have you had conversations with China about how they will deal with this and whether they’re willing to reduce their purchases or — you know, how would the price caps affect those purchases?
SENIOR ADMINISTRATION OFFICIAL: Thanks. So, just to take the second question first: I don’t want to get ahead of news, to get ahead of consultations, but I think what you will see — what you’re likely to see reflected in what leaders say is a recognition that the ministers that have been tasked to do this work need to engage intensively with potential partner countries around the world; engage intensively with stakeholders, including those in the private sector. That’s going to be a very intensive set of dialogues, an intensive set of conversations in the days and weeks ahead.
I don’t want to characterize the state of those to date, the state of what those might be going ahead, other than to say we’re very intensely focused on having that dialogue and having those conversations around potential partners in this effort and ensuring that we work closely with the private sector and other stakeholders to implement this step effectively.
And then, with respect to the broader perspective on the sanctions package, I mean, I think that you’ve seen through the steps that G7 have taken together an ongoing focus on a few things on ensuring that Russia’s economy is isolated from the global economy.
I think, with respect to the actions that you saw yesterday on gold, that was taking another step to disconnect Russia’s financial sector from the global financial system, cutting off yet another route for Russian transactions back into the global financial system.
I think what you’re seeing today is also a continuation of a number of themes that we’ve been articulating for a while: degrading Russia’s defense industrial base and significant new steps and actions there.
I think you also see an ongoing effort to focus on individuals who are most egregiously connected to Russia’s aggression.
And that’s what you’re seeing today with respect to the set of steps that are being articulated on those who are credibly implicated in human rights abuses and war crimes, those who are profiteering from Russia’s invasion.
You know, these — there are an existing set of, I think — there have been an existing set of lines of effort, of themes that have been getting advanced over the months since Russia’s invasion. And these are our collective next set of steps to ensure that we’re continuing to ratchet up the pressure across each of those lines of efforts.
MODERATOR: Great. Thanks, [senior administration official]. And thanks, everyone, for joining. As a reminder, this call was on background, attributable to a “senior administration official,” and the contents are going to lift at 10:00 a.m., Germany; 4:00 a.m., D.C.
I’m going to send a factsheet shortly. So if you don’t get it in the next 10 to 15 minutes, just feel free to ping me. And if you have any other questions, let us know. Thanks for your time.
8:57 A.M. CEST