India keen to boost cooperation with Russia, says PM ModiIn order to implement the proposed the G-7 cap, European Union member nations would have to come along. This looks uncertain.
In a significant development, the finance ministers of the Group of Seven -- the US, Canada, France, Germany, Italy, the United Kingdom, and Japan -- have recently agreed on a plan to implement a price-capping mechanism on Russian oil exports.
In a joint statement, the G-7 ministers have said, "We confirm our joint political intention to finalize and implement a comprehensive prohibition of services which enable maritime transportation of Russian-origin crude oil and petroleum products globally."
The statement says, "The provision of such services would be allowed only if the oil and petroleum products are purchased at or below a price... The initial price cap will be set at a level based on a range of technical inputs and will be decided by the full coalition."
Will the Group of Seven be able to enforce its price-capping mechanism? Observers say that the G-7 price cap plan on Russian oil comes as Western economic powers seek to deplete Russia's war chest in the wake of its invasion of Ukraine in February this year. Russia's higher oil prices do help it fund its current war programme. In June, Russian oil exports fell by 250,000 barrels per day to 7.4 million barrels per day, its lowest level since August last year. Nevertheless, the Kremlin's export revenues surged by $700 million per month.
India keen to boost cooperation with Russia, says PM Modi
In order to implement the proposed the G-7 cap, European Union member nations would have to come along. This looks uncertain. Russia's oil and natural gas exports are very important for the EU. The EU's trade with Russia amounts to 80 billion euros.
Hungary, a member of the EU, maintains very close relations with Russia. It held up an agreement on the EU's original sanctions package targeting Russia's energy sector. Budapest has already signalled it would oppose any oil price cap.
Germany, an important member of the EU, has had very close ties with Russia. Berlin has always sought to conduct its Russia policy in a way that would keep Moscow in good humour. In 2008, Germany vetoed NATO membership to and Georgia. In 2016, when NATO manoeuvred near its eastern flank, Germany decried this. In 2014-2015, the US wanted to arm Ukraine over Russia's annexation of Crimea. Germany (and France) opposed it.
After the Ukrainian crisis erupted in February this, German Chancellor Olaf Scholz has never been really tough with Russian President Vladimir Putin. In his talk with President Putin in March, Chancellor Olaf just urged him to end the fighting in Ukraine and open humanitarian corridors. Olaf appeared to be receptive when Putin insisted Kyiv must agree to demilitarize Ukraine, accept Moscow's sovereignty over Crimea and surrender territory to Moscow-backed separatists in eastern Ukraine.
(Jagdish N. Singh is a senior journalist based in New Delhi. He is also Senior Distinguished Fellow at the Gatestone Institute, New York)
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