G7 countries seek to impose stricter sanctions on Russia in the West

Leaders of the Group of Seven (G7) nations are currently holding their annual summit in Hiroshima, Japan. One of their main goals is to force Russia to end the war and help its already battered economy. However, finding new ways to counter Russia is a daunting task, as the United States and its allies have already imposed the toughest sanctions ever against major economies. The G7 summit will be a reminder to President Joe Biden and the president that their dominance in global trade is eroding as emerging powers such as China and India provide Russia with an alternative economic lifeline for survival.

According to Niels Graham, Deputy Director of the Atlantic Council Global Economic Center, “The G7 no longer has the economic gravity it once did.” He claimed that there are other economic actors who can intervene. These sanctions are still having a big impact, and they have achieved many of the goals hoped by U.S. and European policymakers. The overarching goal was to isolate Russia as a “smaller and weaker” economy. Russia’s economy contracted 2.1% last year, according to the World Bank and International Monetary Fund.

Sanctions have caused Russia’s economy to suffer from the highest inflation and ruble devaluation since the start of the war. However, Russia has survived the sanctions regime by diverting its economy away from the West. According to Janice Kluge, a Russian economist at the German Institute for International and Security Studies, “China has become an important economic partner for Russia at the moment.” Russia has also strengthened its economic ties with India.

Russia’s oil and gas revenues were down 40% in early 2023 compared to the same period last year just before India’s invasion of Ukraine. However, Moscow still generates billions of dollars each month in energy sales to emerging trading partners, such as India and some European countries like Hungary, which continue to import Russian natural gas. According to Alexander Gabuev, director of the Carnegie Russia-Eurasia Center, “The economy is adapting, and the Kremlin has the resources to continue the war.”

The sanctions regime should not be seen as a failure. Former White House official Daleep Singh argued that the full effects of sanctions would take time to set in. “There was no plausible way to cut off a $1.7 trillion economy from the world in weeks or months,” he said. Sanctions are a long-term tool, and when sanctions are put in place, an immediate reaction is often not visible or measurable.

Western powers can do more to enforce existing sanctions by blocking countries and companies from providing military technology to Russia. However, to further cut Moscow’s key revenue stream, the price cap for Russian oil, currently set at $60 a barrel, has been lowered. Other potential measures to pressure Russia are reportedly being considered, but there seem to be disagreements over the proposals.

Leaders at the summit will also discuss the threat posed by China and climate change, which will be high-profile topics alongside the war in Ukraine. Even if the summit opens a new breakthrough in sanctions against Russia, it won’t be enough. According to Kluge, Putin’s calculations about the continuation of the war need to be changed. Russia can sustain its war effort “for a long time as long as other major economies are willing to trade with Moscow.” She claims that, in this war, for Russia, sanctions will not change the situation.

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