Washington is ready to suspend a provision allowing Russia to make bond payments, US Treasury Secretary Janet Yellen said Wednesday, a move that increases Moscow’s chances of failing to pay its foreign debt and default. informs the American newspaper “Politico”
The clause, which falls under the US sanctions regime, has allowed Russia to service its foreign debt so far with the approval of the US Treasury Department’s Office of Foreign Assets Control (OFAC). However, it expires on May 25.
“The expectation was that this would be limited in time. It is reasonable to expect the permit to expire,” Yellen told reporters in Bonn, Germany, before the G7 finance ministers’ meeting. “The final decision has not yet been made, but I think so it is unlikely that we will continue it.”
Yellen also commented on what the West could do about Russian oil exports, which is currently the subject of intense debate in the EU, which wants to include oil in its next package of sanctions, but so far blocked by Hungarian resistance.
One approach, Yellen said, is to impose tariffs or price caps on Russian oil exports. “Oil and gas money are a very significant source of revenue for Russia,” she said. “We would like to do what we can to reduce this revenue.”
“Tariffs, price ceilings, other options are on the table,” she added. “It is important for Europe to choose the best course, but we continue to have these talks.” However, the newspaper clarified that this idea has not yet received strong support in Brussels.
Speaking on Wednesday in Brussels, EU Commissioner for Economic Affairs Paolo Gentiloni described it as a “rather interesting proposal”, but said the EU was still focused on the oil embargo. He added that the discussion would be resumed in Bonn at the G7 summit.
More broadly, Europe is divided over alternatives to a full embargo. Italy is pushing for a reduction in the price of oil, while Germany is resisting the idea on the grounds that it will force Russia to cut off supplies.
Janet Yellen: The total embargo on Russian oil will raise prices
Call for increased production
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In addition to oil, Yellen commented on the debate whether the West can expropriate frozen Russian assetsto finance the reconstruction of Ukraine – an idea that the European Commission is exploring. German Finance Minister Christian Lindner also mentioned it in commentspublished on Wednesday in the Handelsblatt.
“It is very natural that, given the huge destruction in Ukraine and the huge reconstruction costs that will arise there, we all hope that Russia will pay at least part of the price,” she said. But the confiscation of nearly 300 billion euros of Russian central bank assets held outside Russia “is not something that is legally allowed in the United States,” she warned.
“Other countries too have legal issues around that“There are a number of problems, and talks are just beginning.”
He expressed such a cautious tone Executive Vice President of the European Commission Valdis Dombrovskiswho spoke on Wednesday in Brussels.
“First we make the legal assessment and then we decide on the next steps,” he said.
As for assets frozen by EU countries as a result of sanctions against registered companies and individuals – amounting to nearly 30 billion euros in April – Dombrovskis said such a move should be “made on the basis of criminal law” in each EU country.
