Biden, G7 hit Russian trade in latest Ukraine retaliation

WASHINGTON, March 11 (Reuters) – President Joe Biden opened a new attack on Russia’s economy on Friday over its invasion of Ukraine, joining with allies to hit Moscow on trade and shut down development funds, and announcing a ban on imports of Russian seafood, vodka and diamonds.

Biden, locked in a test of wills with Russian President Vladimir Putin, said the moves collectively will deliver “another crushing blow” to Russia’s economy, already weighed down by global sanctions that have cratered the ruble and forced the stock market to close.

“Putin is an aggressor. Putin is the aggressor. And Putin must pay a price,” Biden said at the White House, noting he had earlier spoke by phone to Ukraine President Volodymyr Zelenskiy.

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But Biden criticized voices in the United States clamoring for an active US military presence in Ukraine or US backing of a “no-fly zone” to protect Ukrainians from the Russian onslaught.

“The idea that we’re gonna send in offensive equipment and have planes and tanks and trains going in with America pilots and American crews …that’s called World War III, OK? Let’s get is straight here, guys,” he told Democrats in Philadelphia.

“We will defend every inch of NATO territory, every single inch,” including NATO members bordering Russia, Biden said, “Granted, if we respond it is World War III, but we have a sacred obligation on NATO territory … although we will not fight the Third World War in Ukraine,” he said.

At the White House, Biden joined fellow Group of Seven leaders in calling for revoking Russia’s “most favored nation” trade status, which would allow G7 nations to increase tariffs and set quotas on Russian products. The US Congress would need to pass legislation to revoke the trade status, and lawmakers recently have been moving in that direction.

“We remain resolved to isolate Russia further from our economies and the international financial system,” the G7 said in a statement.

Trade made up about 46% of Russia’s economy in 2020, much of that with China or linked to energy exports that European nations depend on for heat and electricity, making it unclear how deeply these moves will impact Russia’s economy.

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Biden also banned the US import of Russian vodka, seafood and diamonds.

He warned that Russia would pay a “severe price” should it use chemical weapons against Ukraine. The United States has expressed fears that Russia could be paving the way for a chemical weapons attack, without citing evidence.

White House spokesperson Andrew Bates told reporters on Air Force One that if Russia is targeting civilians in Ukraine “that would be a war crime.” Russia calls its actions in Ukraine a “special operation.”

Biden said the United States would add new names to a list of Russian oligarchs who are sanctioned, and ban the export of luxury goods to Russia.

In a separate statement, the White House said Biden would ban US investment in Russia beyond the energy sector, and that G7 nations would move to block Russia from funds from the International Monetary Fund and World Bank.

US President Joe Biden delivers remarks to the Democratic National Committee (DNC) Winter Meeting in Washington, US, March 10, 2022. REUTERS/Jonathan Ernst

“Those are the latest steps we’re taking but they’re not the last steps we’re taking.” Biden said.

The coordinated moves by Washington, London and other allies come on top of a host of unprecedented sanctions, export controls and banking restrictions aimed at pressing Putin to end the largest war in Europe since World War Two.

The moves have already caused the Russian economy to collapse, and the IMF is now predicting that it will plunge into a “deep recession” this year. On Thursday, Moscow banned the export of telecom, medical, auto, agricultural, electrical and tech equipment, as well as some forestry products, in retaliation.

The United States is expanding sanctions on Russia to include executives of sanctioned banks and Russian banker Yuri Kovalchuk, as well as Russian lawmakers.

“Russia cannot grossly violate international law and expect to benefit from being part of the international economic order,” the White House said in a statement.

CAVIAR, HEAVY METALS

Stripping Russia of its favored nation status paves the way for the United States and its allies to impose tariffs on a wide range of Russian goods. L5N2VE2S1

Russia is among the world’s top exporters of oil, natural gas, copper, aluminum, palladium and other important commodities, and accounted for 1.9% of global trade in 2020. China is its biggest export destination. read more

Reuters Graphics

In the United States, removing Russia’s “Permanent Normal Trade Relations” status will require an act of Congress, but lawmakers in both houses – and on both sides of the political aisle – have already signaled their support.

The White House will work with lawmakers on legislation to revoke Russia’s status, administration sources said.

In 2019, Russia was the 26th largest goods trading partner of the United States, with some $28 billion exchanged between the two countries, according to the US Trade Representative’s office.

The ban of US luxury exports to Russia and Belarus — including high-end watches, vehicles, clothes, alcohol and jewelry — takes effect immediately on Friday, the Commerce Department said in a separate statement as part of the effort to further isolate Moscow and its allies.

The United States imported $1.2 billion in Russian fish and shellfish in 2021, according to the US Census Bureau, including sturgeon black caviar. America that year also imported from Russia $275 million worth of diamonds, and about $21 million in alcoholic beverages, according to the Census Bureau.

Top US imports from Russia included mineral fuels, precious metal and stone, iron and steel, fertilizers and inorganic chemicals, all goods that could face higher tariffs once Congress acts to revoke Russia’s favored nation trade status.

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Additional reporting by Jeff Mason in Philadelphia, Jason Lange and David Morgan in Washington and Ismail Shakil in Bengalaru. Editing by Heather Timmons and Alistair Bell

Our Standards: The Thomson Reuters Trust Principles.

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