G-7 Latest: Zelenskiy Tells Leaders Aid Will Be Needed Long Term

·11 min read

(Bloomberg) -- The war in Ukraine again dominated the Group of Seven summit in the Bavarian Alps as leaders met for a second day of talks. President Volodymyr Zelenskiy spoke to them by video link from Kyiv and said he wants the war to be over by the end of the year, according to officials familiar with his remarks.

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The club of rich nations adopted a declaration pledging to support Zelenskiy and his government “for as long as it takes.” President Joe Biden also told his Ukrainian counterpart that the US will supply his armed forces with an advanced surface-to-air missile defense system.

Leaders addressed topics including climate, gender equality and food security, with the world facing a threat of widespread famine due to stocks stranded in Ukraine, one of the world’s biggest grain exporters. Counterparts from India, Indonesia, Argentina, South Africa and Senegal joined the discussions.

Key Developments

  • Besieged at Home, Johnson Misses Out on G-7 Moment With Biden

  • G-7 Edges Closer to Ditching Pledge to End Fossil-Fuel Financing

  • G-7 Expected to Agree on Exploring a Price Cap on Russian Oil

  • Russia Defaults on Foreign Debt for First Time Since 1918

  • US Resuscitates Bid at G-7 to Counter China’s Belt and Road

(All times CET)

Ukraine Attack Will ‘Strengthen Resolve’ of G-7 (6.25 p.m.)

Russia’s missile strike on a shopping center in central Ukraine shows “once again the depths of cruelty and barbarism to which the Russian leader will sink,” UK Prime Minister Boris Johnson said in a statement read out to reporters. The mall was engulfed in flames after the attack and Zelenskiy said more than 1,000 civilians were on site.

“Putin must realize that his behavior will do nothing but strengthen the resolve of the UK and every other G7 country to stand by Ukraine for as long as it takes,” Johnson said.

Pledge to End Fossil-Fuel Financing in Peril (6:30 p.m.)

The G-7 is moving toward reversing a commitment to halt the financing of overseas fossil-fuel projects by year’s end, a proposal now viewed favorably by most members, according to people familiar with the matter.

Leaders are converging on a reference to the increased role of gas projects, a consequence of Russia’s invasion of Ukraine straining their energy supply. French President Emmanuel Macron was among those who supported financing of new fossil-fuel projects during a meeting with the leaders of African nations on Monday, according to a person with knowledge of the talks.

Zelenskiy Told Leaders Aid Will be Needed Long-Term (6:15 p.m)

German Chancellor and summit host Olaf Scholz said Zelenskiy had “very forcefully” described the situation in Ukraine, and had expressed his gratitude “for all the support that so many nations are providing” while underscoring that it will be needed “for a long time.”

“We will all -- and we assured him of that -- continue to support Ukraine’s defense against Russia,” Scholz told reporters after the second day’s discussions ended and before leaders headed into dinner.

Japan Wants to Drop Emissions-Free Vehicles Target (5 p.m.)

Japan is seeking to remove a reference to a target for 50% of vehicles to be emission free by 2030 from the final summit statement, according to people familiar with the situation. Japan’s foreign ministry said the country is following “a wide range of options” in trying to cut harmful emissions.

“There’s no perfect technology when it comes to pursuing zero emissions,” the ministry said, specifying electric cars, fuel-cell cars and decarbonizing fuel.

Leaders Stress Energy Security in Climate Plans (3:20 p.m.)

The G-7 adopted a resolution together with Argentina, India, Indonesia, Senegal and South Africa in which they agreed to work together “to accelerate a clean and just transition towards climate neutrality, while ensuring energy security.”

They also hinted at extending a multi-billion dollar program to help South Africa exit coal to other countries. Leaders welcomed progress made on the Just Energy Transition Partnership with South Africa adopted at the COP26 climate summit, and pledged to advance negotiations with Indonesia, India, Senegal and Vietnam on similar programs “to support energy policy reforms, with a view to decarbonising energy systems and increasing energy efficiency.”

Biden Told Zelenskiy He’ll Get Defense Systems (2:12 p.m.)

A new planned US weapons shipment to Ukraine came together just as Zelenskiy asked G-7 leaders for more air defense systems in response to a Russian missile strike on Kyiv, according to Biden’s top national security aide. “The president was able to be positively responsive to him on that,” US National Security Jake Sullivan told reporters at the summit.

The missile attacks were the first in weeks on the Ukrainian capital and they were at the front of Zelenskiy’s mind during his remarks to Biden and other leaders, Sullivan said. The US is expected to announce the purchase of an advanced medium to long-range, surface-to-air missile defense system known as NASAMS, a person familiar with the matter said before Zelenskiy spoke virtually to G-7 allies.

Ukraine can only strike down a fraction of incoming missiles from Russia with their current air defense platforms. It remains unclear how many NASAMS units Ukraine will receive, or when they will arrive and how Ukrainian troops will be trained to use them.

US Says Oil-Price Cap Challenging (2 p.m.)

White House officials were at pains to make sure the oil cap idea was not getting oversold as a done deal when it’s still very much a concept allies are trying to understand and see if it’s technically possible.

“I think the single biggest factor here is that this is not something that can be pulled off the shelf in a tried and true method that has repeated historical precedent, and therefore can simply be taken as a standing option,” Sullivan told reporters.

“It is a new kind of concept to deal with a particularly novel challenge, which is how to effectively deal with a country that selling millions of barrels of oil a day and try to deprive it of some of the revenues that they’re getting from the sale of that oil.”

Biden-Erdogan Bilateral at NATO Uncertain (2 p.m.)

One of Biden’s top priorities at NATO will be to see Turkish President Recep Tayyip Erdogan and get him to drop his opposition to Sweden and Finland joining the military alliance. White House officials point to a flurry of activity around setting that bilateral. The two men last met in person at the G-20 in Rome in November. Finland and Sweden applied to join NATO in May following Russia’s attack on Ukraine, only to have their accession immediately blocked by Erdogan.

“Nothing is scheduled at the moment but they may very well have the opportunity to see one another at the NATO summit,” Sullivan said. Let’s see how the next 24 hours unfold. There is a flurry of diplomatic activity occurring.”

France Wants Iran, Venezuela Oil on Market (1:35 p.m.)

Crude from Iran and Venezuela should be allowed to return to the market to help stabilize oil prices, according to a senior official from the French presidency. There is a “knot” in the shape of US sanctions on Iran that needs to be untied for that to happen, the official said.

Diversification of supply, a discussion with all producers on a price cap, and a temporary increase in oil output would also help mitigate the burden on consumers and businesses, the official said.

Ukraine Freedom Is ‘Price Worth Paying’: Johnson (1 p.m)

Soaring prices in the UK and a hit to the national economy is a price “worth paying” for freedom in Ukraine, Johnson told the BBC.

“In terms of staying the course, imagine if you didn’t,” Johnson said. If Russian President Vladimir Putin was allowed to get away with the “violent acquisition of huge chunks” of another country, “the lessons for that would be absolutely chilling in all of the countries of the former Soviet Union.”

Zelenskiy Requests More G-7 Support (12 p.m.)

Zelenskiy addressed each of the leaders individually with a specific comment, according to the officials, who asked not to be identified by name.

He requested support on flight defense systems, security and financing for reconstruction, as well as help on unblocking exports of the country’s grain.

G-7 to Explore Russian Oil-Price Cap (10:05 a.m.)

The G-7 is expected to reach an agreement for member states to develop and discuss ways to set a cap on the price of Russian oil, according to a senior Biden administration official. The group plans to direct relevant ministers to work with other governments and private-sector companies to come up with a mechanism that focuses on transportation of Russian oil to foreign markets. Right now it remains an idea, and the discussion will center around its viability. The discussions will happen over the coming days and weeks and there is no set date to establish a cap, the official said.

Negotiators -- especially those from the US and Italy -- have sought to broker an agreement on a Russian oil price cap in order to curb revenues from the commodity that the Kremlin uses to fund its war in Ukraine while ensuring the oil’s availability to large buyers, like China and India, in order to avoid further price shocks.

US Treasury Department officials have been discussing in recent days a proposal championed by Simon Johnson, an MIT professor and former chief economist at the IMF, that would seek to cap the price of Russian oil by permitting some trade in the commodity supervised by Treasury’s Office of Foreign Assets Control and its UK and European counterparts. The scheme would allow banks and other firms to finance the trade provided they regularly certify to regulators that the oil was not sold above an agreed upon price.

For an explainer on how it could work, read this:

There is also lot of skepticism about how something like this could work.

US Providing Air-Defense System (9:10 a.m.)

The impending US announcement of the purchase of NASAMS, an advanced medium to long-range, surface-to-air missile defense system, comes as Biden and G-7 allies prepare to meet virtually with Zelenskiy. Ukraine is the target of missile attacks and can only fend of a fraction of incoming rockets. Questions remain on how quickly the government in Kyiv can get the defense systems, how many will come and how long will it take to train people to use them.

“That kind of defense system is absolutely what the Ukrainians need,” said Jim Risch, the top Republican on the Senate Foreign Relations Committee, in an interview. He just got back from Kyiv where he met with Zelenskiy.

Sanctions Hurting Russia, Scholz Says (8:30 a.m.)

Scholz said international sanctions on Russia will continue to hurt its economy, pushing back against criticism that not enough is being done to choke off revenue from energy exports that continues to flow into Moscow’s coffers.

The sanctions “have contributed to the fact that Russia’s economy has been, and will continue to be, significantly weakened, because a country more or less cut off from technological progress will soon fall behind significantly economically,” Scholz said in an interview with public broadcaster ZDF.

Scholz said G-7 leaders are discussing a ban on imports of Russian gold, but it was not the forum for a definitive decision and the issue would also have to be addressed by the 27-nation European Union.

Putin Must be Challenged at G-20: Von der Leyen (8 a.m.)

European Commission President Ursula von der Leyen said it would be better to confront Putin at November’s G-20 summit if he attends rather than boycott the meeting in Bali.

“It’s important to tell him to his face what we think of him and what we think of this type of action,” von der Leyen said late Sunday in an interview with ZDF.

“Other autocrats around the world are looking very closely at whether it is still possible to move borders and invade countries with brute force, military might, or whether democracies will stand up and use their own strength,” she added.

UK to Help Trace Stolen Ukraine Grain (8 a.m.)

The UK will contribute 1.5 million pounds ($1.8 million) to develop a testing process to identify if grain sold by Russia on the world market has been illegally taken from Ukraine. The aim is to “tackle the scourge of stolen grain, deterring Russian activity and ensuring Ukraine is getting the revenue it so desperately needs from any grain it grows,” the government said.

The UK is also contributing up to 10 million pounds in materials and equipment to repair rail infrastructure and help get grain out of the country by rail.

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