Top economic policymakers from the Group of 7 nations agreed on Tuesday to work together to mitigate the impact of the war with Iran on global energy and food prices, even as fault lines emerged among them over how to ensure that Russia does not benefit from the conflict.<\/p>\n
The two-day summit in Paris came at a moment of upheaval for the global economy, which has been destabilized this year by the United States-Israeli led war in Iran. The war fueled a fresh bout of inflation and has been a drag on global growth. It has also created new points of tension between the United States and Europe, which must deal with the fallout of a war that it did not want.<\/p>\n
\u201cWe acknowledge that global economic uncertainty has heightened risks to growth and to inflation amid the ongoing conflict in the Middle East, particularly through pressures on energy, food and fertilizers supply chains, which particularly affect the most vulnerable countries,\u201d the G7 finance ministers and central bank governors wrote in a joint statement, known as its communiqu\u00e9. \u201cTo mitigate these negative impacts, we recognize that a swift return to free and safe transit through the Strait of Hormuz and a lasting resolution to the conflict are imperative.\u201d<\/p>\n
The meetings also focused on how to bolster supply chains of critical minerals, which are dominated by China, and continued support for Ukraine as it continues to fight its four-year war with Russia. The officials pledged to \u201cimpose severe costs on Russia\u201d and consider additional sanctions.<\/p>\n
That statement was undercut during the meetings, however, after Treasury Secretary Scott Bessent said on Monday evening that the United States would grant a third sanctions reprieve to Russia, giving it permission to sell its seaborne oil.<\/p>\n
The move was intended to bolster international oil supplies and help the world\u2019s poorest countries cope with high energy costs while the war persists. Mr. Bessent suggested that the sanctions relief for Russia was only temporary and intended to \u201chelp stabilize the physical crude market and ensure oil reaches the most energy-vulnerable countries.\u201d<\/p>\n
But the watering down of Russia sanctions was a disappointment to European officials, who have spent the past four years working with the United States to cripple Russia\u2019s economy with coordinated statecraft.<\/p>\n
\u201cThe waiver on Russian oil \u2014 this was not a G7 decision,\u201d Roland Lescure, France\u2019s finance minister, said at a news conference on Tuesday, referring questions about the decision to Mr. Bessent directly. \u201cNobody wants Russia to have a windfall profit.\u201d<\/p>\n
Valdis Dombrovskis, the European commissioner responsible for the trade bloc\u2019s economy, lamented on Tuesday that Russia was gaining from the war in Iran and said that he disagreed with the United States\u2019 decision.<\/p>\n
\u201cFrom an E.U. point of view, we do not think that this is a time to ease pressure on Russia,\u201d Mr. Dombrovskis said. \u201cIf anything, we would need to strengthen that pressure.\u201d<\/p>\n
Noting that the sanctions exemption had been extended to Russia before, Mr. Dombrovskis added that they were \u201cnot so temporary anymore.\u201d<\/p>\n
In a post on social media on Tuesday, Mr. Bessent said that he had \u201cconstructive discussions\u201d with his counterparts about the global economy, global imbalances, cybersecurity, Iran and critical minerals. He had no further explanation for the Russia sanctions relief, which he had said last month would not be renewed.<\/p>\n
Speaking at a conference about combating terrorist financing following the G7 meeting, Mr. Bessent also called on Europe to get tougher on Iran. He asked European policymakers to impose more sanctions on Iranian banks, shell companies and financiers.<\/p>\n
\u201cIf you share our fury about Iran\u2019s destabilizing agenda, terrorists seeking to hold the global economy hostage, drug cartels poisoning our communities and threats to innocent lives, then now is the time to join the United States in moving aggressively,\u201d Mr. Bessent said.<\/p>\n
Pressuring Europe to exert more economic pressure on Iran while the United States eases sanctions on Russia could pose challenges for the Trump administration. Despite the financial might of the United States, adversaries have become more adept at evading U.S. sanctions and coordination with western allies is important for maintaining their effectiveness.<\/p>\n
\u201cU.S. sanctions policy is increasingly unilateral and transactional, which diminishes its effectiveness,\u201d said Alex Zerden, the founder of Capitol Peak Strategies and a former official in the Treasury Department\u2019s Office of Terrorism and Financial Intelligence. \u201cThe decision to unilaterally relax sanctions against Russia while pushing the G7 to toughen Iran sanctions creates inherent policy tensions.\u201d<\/p>\n
It is not clear that the U.S. sanctions on Iran have been effective in negotiations over reopening the Strait of Hormuz or that easing sanctions on Russia have helped to corral oil prices.<\/p>\n
Crude prices have for the most part remained above $100 per barrel and volatile since the war started in February. With inflation fears mounting, investors have been selling U.S. Treasury bonds, causing the yield on the 30-year bond to rise to its highest level since 2007.<\/p>\n
The International Monetary Fund warned on Tuesday that sustained energy price surges could sharply reduce household purchasing power and force businesses to shutdown. At the same time, the agency urged policymakers to be careful in their responses and to avoid remedies that would add to debt burdens or worsen inflation.<\/p>\n
Many G7 nations are pushing ahead with their renewable energy agendas in hopes of buttressing their economies from energy shocks. While the United States no longer favors such technology under Mr. Trump, there was broad agreement that advanced economies need to be less reliant on oil from the Gulf.<\/p>\n
\u201cThis is the largest energy challenge that we have faced in a generation,\u201d said Fran\u00e7ois-Philippe Champagne, Canada\u2019s finance minister, who explained that Canada hoped to increase its energy exports to countries in Europe and Asia. \u201cI think what you\u2019re going to see is energy systems around the world are being redesigned.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Top economic policymakers from the Group of 7 nations agreed on Tuesday to work together to mitigate the…\n","protected":false},"author":2,"featured_media":236966,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[35],"tags":[17084,1452,10902,77882,92736,83081,81742,1480,75,84,83,9,24,63,17085,18543,1069,2052,1554,1876],"class_list":["post-236965","post","type-post","status-publish","format-standard","has-post-thumbnail","category-manhattan","tag-bessent","tag-donald-j","tag-economic-conditions-and-trends","tag-embargoes-and-sanctions","tag-group-of-seven","tag-inflation-economics","tag-international-monetary-fund","tag-international-relations","tag-manhattan","tag-manhattan-headlines","tag-manhattan-news","tag-new-york","tag-new-york-city","tag-nyc","tag-scott","tag-treasury-department","tag-trump","tag-united-states-economy","tag-united-states-international-relations","tag-united-states-politics-and-government"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/236965","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/comments?post=236965"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/236965\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media\/236966"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media?parent=236965"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/categories?post=236965"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/tags?post=236965"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}