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Friday, July 19, 2024 | Back issues
Courthouse News Service Courthouse News Service

G7 leaders seek to punish Russia and China, but doubts hang over Italy summit

G7 leaders deepened their commitment to stand united against Russia and China. But their summit was marked by infighting between France and Italy, a tired U.S. President Joe Biden and doubts about the West's ability to curtail Moscow and Beijing.

FASANO, Italy (CN) — With sunny southern Italy as their backdrop, U.S. President Joe Biden and his Group of Seven counterparts on Friday sought to display a united front as they capped a week marked by a dramatic hardening of the conflict between the West and Russia and China.

This week, the European Union joined Washington in imposing hefty tariffs on Chinese electric vehicles; the United States and hit Russia's stock market with sanctions; G7 powers struck Russian banks with fresh sanctions and accused Beijing of aiding Russia militarily; and they threatened to sanction Chinese banks found to be involved in military deals with Russia.

The G7's biggest move came on Thursday when it agreed to use billions of dollars in profits on interest from roughly $280 billion in frozen Russian assets sitting in Western banks and leverage that money to give Ukraine $50 billion in loans.

Despite all these seemingly high-minded and tough actions by G7 leaders and their efforts to smile warmly for the world's cameras, a mood of failure, peril and disunity hung over a summit where French President Emmanuel Macron and Italian Premier Giorgia Meloni openly engaged in a spat over abortion rights and Biden looked feeble and distracted, skipping a stately dinner Thursday due to fatigue.

The summit left an impression of failure because despite a slew of previous Western sanctions and at least $176 billion in support for Kyiv, Russia continues to advance on the battlefields in Ukraine, its economy has resisted the West's economic war and Moscow hasn't been isolated on the global stage. There is little reason to think these latest Western punches will alter this reality.

On Thursday, after it was cut off from trading in U.S. dollars and euros, the Moscow Exchange temporarily closed before it officially adopted the Chinese yuan as its benchmark. Much of the stock market's business was already done in the yuan and many Russians shrugged off the new sanctions as doing little to disrupt their lives.

There's also peril in the West's actions.

The move by the European Commission to impose tariffs on Chinese electric vehicles drew criticism and alarm from many in Europe, fearful of Beijing's potential economic retaliation. Brussels accuses China of dumping heavily subsidized electric vehicles on the EU market.

“Europe's farmers have been generously subsidized for decades, and export the subsidized products to China,” wrote Alan Posener, a British-German columnist for Die Welt, a German newspaper. “In short: China could hit Europe's farmers hard by reacting to our car tariffs with agricultural tariffs. Other European products, from Airbus machines to animated films, as well as nuclear, solar and wind energy, have also been and continue to be subsidized.”

Perils lurk too with using frozen Russian assets.

For one, Ukraine may not be able to pay back the $50 billion loan, especially if it ends up losing the war. In such a scenario, Europeans may be on the hook to pay back the loan.

Also, some economists warn that schemes to use the frozen assets may undermine trust other nations, such as India and Saudi Arabia, will have in holding their funds in European banks.

Such countries may worry their sovereign funds too could be frozen and confiscated one day by the West. For now at least, Western leaders have shied away from entirely confiscating Russia's assets and limited themselves to using profits generated from the interest on those assets.

On Friday, Russian President Vladimir Putin lashed out at the G7 scheme, calling it “theft.”

During a meeting with the Ministry of Foreign Affairs, Putin accused the West of seeking “some kind of legal basis” for freezing Russian assets and that “despite all the trickery, theft is still theft and will not go unpunished.”

The G7's move was “another reminder to Putin: We’re not backing down,” Biden said. “In fact, we’re standing together against this illegal aggression.”

At a meeting with Ukrainian President Volodymyr Zelenskyy during the G7 summit, Biden also signed a 10-year security agreement with Ukraine, a pledge to continue arming and aiding Kyiv militarily for the next decade.

“A lasting peace for Ukraine must be underwritten by Ukraine’s own ability to defend itself now and to deter future aggression anytime in the — in the future,” Biden said.

Biden said the G7 had made it clear that Putin “cannot wait us out, he cannot divide us, and we will be with Ukraine until they prevail in this war.”

Both the $50 billion loan and the security agreement were seen as methods to ensure Ukraine will receive help even if former U.S. President Donald Trump returns to the White House after the November elections and seeks to cut off support for Kyiv.

On Friday, the G7 sought to show the West's global power and appeal as Indian Prime Minister Narendra Modi, Turkish President Recep Tayyip Erdoğan, Argentinian President Javier Milei and other world leaders joined the summit.

Nonetheless, a sense of disunity and political weakness hung over the summit, held at an exclusive luxury resort in Puglia, a southern Italian region along the Adriatic Sea.

During the summit, Western media focused on the political weakness each of the G7 leaders besides Meloni, Italy's popular far-right leader, faces at home.

On Thursday, Macron and Meloni displayed hostility to each other as it emerged the Italian premier had language referring to abortion rights removed from the G7's traditional communiqué. Besides opposing abortion, Meloni may have been interested in removing the wording due to the presence of Pope Francis on Friday, the first Vatican leader to attend a G7 summit.

Speaking to reporters on the sidelines, Macron said he “regretted” the removal of the abortion language.

“You don’t have the same sensibilities in your country,” Macron told an Italian journalist. “France has a vision of equality between women and men, but it’s not a vision shared by all the political spectrum.”

His comments sought to draw a parallel between Meloni and his far-right rival in France, Marine Le Pen. Macron threw French politics into chaos this week when he called snap elections following a major electoral defeat for his liberal party in last weekend's European elections that saw Le Pen storm to victory.

An irked Meloni retaliated by accusing Macron of wanting to score political points.

“I believe it is profoundly wrong, in difficult times like these, to campaign using a precious forum like the G7,” Meloni said, according to Italian media.

Videos showed Meloni icily greeting Macron at a dinner Thursday evening held at a castle in Brindisi.

Biden, meanwhile, was not present at the dinner with the White House saying he was too tired to attend. Throughout Thursday, Biden appeared weak and distracted with G7 leaders at moments seeming to help guide him through the sequence of events.

Courthouse News reporter Cain Burdeau is based in the European Union.

Follow @cainburdeau
Categories / Business, Economy, International, Politics

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