World leaders step up pressure on Russia
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Pressure on Russia over the war against Ukraine has increased today. NATO strengthened its military defenses in Eastern Europe, while G7 leaders agreed new sanctions to prevent Moscow from importing technology for its arms industry and tightened measures against those responsible for war crimes and those who “steal and export Ukrainian grain ”.
The G7 summit in the Bavarian Alps comes as Western leaders grapple with a range of crises sparked by the invasion, ranging from concerns over food and energy supplies to galloping inflation rates, all of which are putting severe strain on the global economy. .
The meeting discusses a price cap for Russian oil as part of efforts to hinder Moscow’s ability to fund the war. Non-G7 countries such as India, which has been a major importer from Russia, are also participating. The EU has already agreed on a gradual ban on shipments by sea, but will allow crude oil deliveries to continue through pipelines, while the US has banned all oil imports and the UK plans to do so by the end of the year. year to do.
Energy sanctions should have an effect in the medium term, the Lex column says, but in the meantime, implementing them will be painful. “What started as an economic shock-and-awe campaign is turning into a war of attrition,” it concludes.
Meanwhile, the global economic outlook continues to deteriorate and the rise in inflation shows little sign of easing.
The Bank for International Settlements, the body that provides services to the world’s central banks, warned yesterday that the leading economies were about to “tipping” into a high-inflation world where rapid price increases are normalized, a process that will take quite a while. difficult to turn around.
“Perhaps we will reach a tipping point, after which an inflationary psychology will spread and become entrenched. This would represent a major paradigm shift,” according to the BIS report. The key for central banks has been to “act quickly and decisively before inflation becomes entrenched,” BIS director Agustín Carstens said.
Food shortages are also a growing concern as blockades of Ukrainian ports threaten supplies to developing countries, especially in Africa, where millions are starving. Sharp spikes in food prices have exacerbated the problems caused by the pandemic, threatening an “unprecedented food emergency”. Unrest about food and fuel prices is also increasing in Latin American countries such as Ecuador.
A de facto naval blockade means Ukraine, one of the world’s largest grain producers, has been unable to export most of the grain stored in its silos, pushing prices to record highs. Turkey and Russia will hold UN-mediated talks with Ukraine in the coming weeks to break the deadlock.
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Need to know: the economy
Russia For the first time since 1998, it was on track to default on its debt after it missed a deadline for interest arrears. The country is rich in foreign exchange thanks to its oil and gas revenues and has repeatedly said it wants to continue to pay off its debts, accusing Western governments of trying to force the country into an “artificial” bankruptcy.
“Bad times lie ahead. The question is how bad.” That is the conclusion of chief economics commentator Martin Wolf while assessing the stark impact of high inflation and low growth on the UK.
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