G7 leaders discuss cap on price of Russian gas to squeeze war funds

SCHLOSS ELMAU, GERMANY -

Group of Seven leaders considered a possible cap on the price of Russian gas exports on Monday as a way to put the squeeze on the funding for Vladimir Putin's war with Ukraine.

The rising price of oil has created a revenue boom for Russia as it continues its assault on the neighbouring country, undermining sanctions imposed by western countries -- including those represented by leaders at the G7 summit at Schloss Elmau, a resort in southern Germany.

Ukrainian President Volodymyr Zelenskyy held a two-hour meeting with G7 leaders at the start of the day. In a virtual appearance, he laid out what his country needs, including tougher sanctions to keep Putin from financing the war.

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The leaders pledged in a statement to support Ukraine "for as long as it takes." Prime Minister Justin Trudeau announced new sanctions on 74 more individuals and businesses in Russia and Belarus on Monday, and more are expected to come on Tuesday.

Canadian government officials at the summit, who provided a briefing to media on the condition they not be identified, said a cap on the price of Russian oil could work to cut into the country's profits on a major source of revenue. They also acknowledged the details are still in the works.

Some market analysts doubt how effective a price cap on Russian oil would be, as enforcement by the G7 would likely depend on co-operation from India and China.

"It is questionable whether countries like India and China will agree to cease purchasing Russian oil, especially as it is trading at a significant discount on the global market price," Carsten Fritsch, a commodities analyst at Commerzbank, told The Associated Press.

India's Prime Minister Narendra Modi was invited to the G7 summit by the host, German Chancellor Olaf Scholz.

As of early June, the country of 1.4 billion people had bought nearly 60 million barrels of Russian oil this year, compared with 12 million barrels in all of 2021, according to Kpler, a commodities data firm.

At a photo session with the G7 and other leaders, Modi clasped Trudeau's hand enthusiastically as he approached. But later, in a one-on-one meeting, the tone was much more sombre.

The two would discuss the impact of Russia's war on Ukraine, democracy and human rights, Trudeau said as he sat down with Modi.

The leaders of the G7, which also includes the United States, United Kingdom, Germany, France, Italy and Japan, are expected to release their final consensus at the end of their summit on Tuesday.

They will then join others in Madrid for a NATO meeting to discuss the military implications of the conflict.

The conflict in Ukraine has been a running theme through Trudeau's meetings with world leaders in Germany, as well as last week at the Commonwealth Heads of Government Meeting in Rwanda.

"Canada is unwavering in the belief that Ukrainians deserve to live in peace," Trudeau said in a written statement that announced the new sanctions on Monday.

"Vladimir Putin and his regime have caused untold pain and suffering in Ukraine and across the world. Together, with our G7 counterparts, Canada is stepping up our continuous and co-ordinated pressure to bring about the end of Vladimir Putin's war of choice."

The new sanctions include six individuals and 46 entities linked to the Russian defence sector, 15 Ukrainians who support the Russian occupation of the country and 13 people linked to government and defence and two entities in Belarus.

The Canadian government also plans to bring in sanctions against state-sponsored disinformation and propaganda agents controlled by senior government officials, Trudeau said, in an attempt to counter Kremlin disinformation.

Canada will also ban the export of advanced technologies that would improve Russia's domestic defence manufacturing capabilities.

Trudeau also announced that Canada, along with the United States, United Kingdom and Japan, will ban the import of certain gold goods from Russia, shutting the commodity out of formal international markets.

Russia was poised to default on its foreign debt on Sunday for the first time since the 1917 Bolshevik Revolution, further alienating the country from the global financial system.

Russia calls any default artificial because it has the money to pay its debts but says sanctions have frozen its foreign currency reserves held abroad.

In his meeting with G7 leaders, Zelenskyy said he wanted to see an end to the war by winter and deny Russia victory, Canadian officials said in the briefing, but the Ukraine president didn't elaborate on what he hopes that will look like, or what kind of truce he might settle for.

He also urged the leaders to begin planning for the eventual reconstruction of the Ukraine communities and infrastructure that have been destroyed by Russian bombings and fighting.

Russia announced its own set of new sanctions against Canada on Monday, targeting 43 Canadians including the prime minister's former adviser Gerry Butts, former Bank of Canada governor Mark Carney and Conservative strategist Jenni Byrne.

Before the meeting, Trudeau and Scholz spoke during a walk from the manor building, or schloss in German, down to one of the meadows, nestled between the building and the mountain view.

"We are … cautious that we will help Ukraine as much as is possible, but that we also avoid that there will be a big conflict between Russia and NATO," Scholz told the media during a photo op with Trudeau.

The night before, in Ukraine's capital city Kyiv, weeks of general calm were shattered by Russian missile strikes. The missiles hit a kindergarten and a residential building, killing one man and injuring a woman and child, the city's mayor said.

This report by The Canadian Press was first published June 27, 2022.

-- With files from The Associated Press

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