Some Russia Sanctions Could Extend Beyond Ukraine War’s End, Janet Yellen Says

NUSA DUA, Indonesia—US Treasury Secretary Janet Yellen said some sanctions against Russia could remain in place even after any eventual peace deal with Ukraine, raising the possibility of a long-term US effort to squeeze Russia’s economy.

Ms. Yellen said any eventual peace deal would involve a review of penalties imposed by the United States and its allies on Russia’s economy.

“There is really no effort from Russia to want to undertake negotiations with Ukraine on any terms that are acceptable to Ukraine,” Ms. Yellen said in an interview in Indonesia, where she attended a gathering of G-20 leaders. . “I believe that in the context of some peace agreement, adjustments to the sanctions are possible and may be appropriate.”

“We would probably feel, based on what happened, that probably some sanctions should remain in place,” he said.

The United States and its allies have sought to degrade Russia’s military capabilities by cutting off its access to advanced Western technology and straining its financial system. Still, Russia made huge revenues from its energy sales this year, and Ms. Yellen led an effort for the Group of Seven advanced nations to impose a price cap on Russian oil in response.

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The price limit would prevent companies from the G-7 and Australia from providing maritime services such as insurance for Russian oil shipments unless the oil is sold below the limit. The goal is to reduce at the same time Russia’s income from the sale of its oil, while still keeping it available on world markets to stabilize prices.

The effort has faced delays as officials work to finalize its details—including the dollar amount for the cap—before it goes into place for Russian crude on December 5. , according to people familiar with the matter.

When it gave preliminary approval to the price cap plan in October, the European Union expanded the measures planned to apply it directly to shipping, as well as secondary services such as insurance and financing. Under these EU rules, ships carrying Russian oil above the price limit would lose access to European maritime services for any future oil shipments, Russian or otherwise.

Those sanctions have worried U.S. officials, according to people familiar with the matter. They were concerned that ships based in Europe and other jurisdictions would avoid carrying Russian oil at all if it meant they could risk losing access to European insurance and financing for future, non-Russian oil shipments, the people said. U.S. officials have sought to make enforcement of the price cap relatively light to entice companies to ship Russian oil under it, which they see as a necessary step to protect the global economy from a sharp increase in oil prices this winter.

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“It’s hard to know what Russia’s response will be. I don’t think they can really afford to shut down a lot of oil. They need the revenue.”

— US Treasury Secretary Janet Yellen

In the interview, Ms. Yellen said she was working with her European counterparts to ease shipping supplies. “We spent some time discussing this with them and discussing their application. And I think we are in a reasonable place on it,” he said.

The push is the latest effort by the United States to lift European sanctions on Russia that they worry could have dire consequences for the global economy. The Biden administration hatched its own price cap plan as a way to relax Europe’s blanket ban on financing and insuring Russian oil because of concerns about the possibility of large quantities of Russian oil leaking onto global markets.

A central question hanging over the price cap is whether Russia will cut its oil exports in retaliation against a Western effort to dictate the price of its most important commodity. Russian officials have said they will not sell oil below the price limit.

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“It’s hard to know what Russia’s response will be. I don’t think they can really afford to shut down a lot of oil. They need the revenue,” Ms. Yellen said.

Ms. Yellen and other Biden administration officials said the price cap could still reduce Russia’s revenue even if it refuses to sell below the cap. Maritime insurance and trade financing are limited outside the major G-7 economies, meaning Russia would have to rely on more expensive and less established services to sell its oil. They also believe that buyers can still demand a price near the Western cap even if they are facing outside of it.

Ms. Yellen said the United States could take measures such as drawing oil from the strategic oil reserve if Russia intentionally cuts its oil exports.

“We think the price cap will work and we still have options with the Strategic Petroleum Reserve that we could use,” he said.

Write to Andrew Duehren at [email protected]

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