G7 To Focus on Ukraine This Week

Leaders of the G-7 nations are to hold talks on the sidelines of a nuclear security summit in The Hague on Monday to consider their response to Russia annexing Crimea, amid doubts that sanctions can constrain President Vladimir Putin.

Since the emergency one-hour meeting was announced last Tuesday, Putin has signed laws completing Russia’s annexation of the peninsula on the Black Sea and his troops seized a Ukrainian airbase there.

In what has become the biggest confrontation between the East and West since the Cold War, the United States and the European Union have imposed sanctions targeting some of his closest political and business allies, but it was unclear whether they went far enough to influence Moscow.

At The Hague, the G-7 will probably discuss how to exert further pressure and at what potential cost.

“It will be an opportunity for us to explain to each other what we are doing and where we are going, to coordinate our actions,” a senior EU official said.

Western governments are struggling to find a balance between putting pressure on Putin, protecting their own economies and avoiding triggering a vicious cycle of sanctions and reprisals.

Dutch Prime Minister Mark Rutte, who is making his residence available to U.S. President Barack Obama and the leaders of Germany, Britain, Canada, France, Japan and Italy for the talks, said the West might want to move slowly.

“Russia has an economy that is highly focused on oil and gas,” Rutte told Reuters. “It is not diversified … If it came to putting in place sanctions, that would hurt Russia considerably. So in my view we should do everything to prevent that.”

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza