A cap on Russian oil prices, postponement of climate change commitments, potential famine in Africa and continued arms supply to Ukraine are to rush at a meeting of G7 world leaders in course of the next three days against the backdrop of the greatest geopolitical crisis since 1945.
The agenda reveals how the world has been turned upside down since the leaders of industrialized nations last met in Cornwall a year ago at a summit chaired by Britain, mainly to focus on the threat posed by China.
Ahead of the summit in Germany, Boris Johnson issued a warning to the West not to show war fatigue, a point that will be echoed when Ukrainian President Volodymyr Zelenskiy addresses the meeting via video link. He is expected to highlight the difficulties his troops face in eastern Ukraine as well as the need for heavier long-range weapons.
Andriy Yermak, the head of Zelenskiy’s office, said the G7 should respond to the latest airstrikes on Kyiv, which killed one on Sunday, with a full gas embargo.
The overall message from the three-day G7 meeting will be that sanctions are slowly degrading Russia’s war machine and will be strengthened if the damage to the wider global economy can be contained.
US President Joe Biden urged the G7 to show resolve as he greeted German Chancellor Olaf Scholz. “We have to stay together, because Putin counted from the beginning on the fact that NATO and the G7 would separate one way or another. But we haven’t and we won’t.
The ban on further Russian gold imports will be another measure of solidarity with Ukraine, but the idea of a Russian oil price cap, backed by US President Joe Biden, has come to the fore in the talks as a visible means of slowing runaway inflation, one of the main topics of conversation when G7 leaders gathered for their first three-day session in the Bavarian Alps.
Such a price mechanism would set an upper limit on oil imports from Russia, which would be imposed unilaterally by each participating country and would prevent Russia from selling at a higher price. For European countries, it is also seen as a potential means of mitigating runaway inflation induced by energy prices.
Some European countries feared that this would require the painful reopening of the European Union’s existing agreement on oil sanctions against Russia. This would require the agreement of all 27 EU member states. The EU is expected to phase out its dependence on Russian oil by the end of the year, with some exemptions, but this agreement required painstaking discussions
It is also unclear how major buyers of Russian crude such as China and India might be brought into compliance with a price cap. One idea put forward by the United States would be to make its access to marine insurance for oil cargoes conditional on paying no more than the agreed fixed cap for oil on board. The EU has agreed to ban insurance for the transport of crude and petroleum products from Russia.
For weeks, Italy has been pushing to go further by introducing a cap on gas prices, an idea backed by Italian energy companies. French officials at the summit expressed their willingness to discuss an oil price cap, but suggested Europe needed a broader energy price shield to keep inflation in check.
But there is no guarantee that Vladimir Putin would not react by further cutting off the gas supply. Gazprom cut gas supplies by 60% last week, citing maintenance problems caused by a lack of parts supplies from Canada, an explanation G7 leaders do not consider credible. The Nord Stream 1 pipeline is due to be completely shut down for regular two-week summer maintenance in July and there are fears that Putin could be ready to deal a blow to Russian revenues and Gazprom if he thought it would cause an industrial collapse across the country. ‘Europe.
EU states are expected to have their reserves replenished to 80% by November in anticipation of a harsh winter, but there are also complex entitlements for national reserves to be distributed to countries with energy shortages.
EU states are already allowing some coal-fired power plants to stay open longer than planned. The change in approach to fossil fuels, including gas, is reflected in the draft communiqué which is less intransigent on the need to end all future investment in fossil fuels, but the language is so written that it also retains commitments to a radical green energy transition.
This year, the President of the G7, the German Chancellor Olaf Scholz, has invited as partner countries Senegal, currently President of the African Union, Argentina, currently at the head of the Community of Latin American and Caribbean States , as well as Indonesia and India, the current and next hosts of the G20 group of major industrial nations, as well as South Africa. Indonesian President Joko Widodo announced he was joining a long list of mediators in the Ukraine conflict, saying he would visit Moscow to propose a ceasefire.
African leaders, faced with drought and soaring wheat prices, will want to know what is being done to speed the flow of grain out of Ukraine, but talks of a safe route for grain convoys out of the Ukrainian port from Odessa on the Black Sea are proving difficult. The EU has insisted that it does not impose sanctions on Russian grain or fertilizer exports, and no blockage of Ukrainian exports would exist without Russian action.
Scholz said: “The summit must not only send the message that NATO and the G7 are more united than ever, but also that the democracies of the world are uniting against Putin’s imperialism, just as they are doing in the fight against hunger and poverty”.
The summit takes place at Schloss Elmau castle, at the foot of Germany’s highest mountain, the Zugspitze, the same venue where the country last hosted the G7 annual meeting in 2015. That meeting was chaired by Angela Merkel in the wake of the first Russian invasion of Ukraine and Merkel is now considered to have left her successor a legacy of over-reliance on Russian energy.