By Jonny Lupsha, Wondrium Staff Writer
Russia has lost an importer of its gold after a Swiss ban. Switzerland is known as one of the world leaders in gold refining. The Group of Seven (G7) has acted against Russia on Ukraine before.
In June, President Joe Biden announced that the United States, the United Kingdom, and other Group of Seven countries would ban imports of Russian gold. These efforts will cut off tens of billions of dollars a year to Russian President Vladimir Putin and Russian oligarchs. In July, the European Union (EU) announced similar bans. On Wednesday, Switzerland—a global leader in gold refinement—followed suit.
Much like other sanctions placed on Russia, and Putin specifically, nations that have banned Russian gold are also making attempts to cut Russia off from international financial systems.
This isn’t the first time the G7 has acted against Russia with regard to Russia’s treatment of Ukraine. In his video series International Economic Institutions: Globalism vs. Nationalism, Dr. Ramon Degennaro, CBA Professor in Banking and Finance at the University of Tennessee, Knoxville, recalls the turbulence of the group’s reaction to Russia’s annexation of Crimea in 2014.
Original G6
“The original G6 met in a French chateau, south of Paris in 1975, to discuss the oil crisis and an earlier decision by Richard Nixon to leave the international gold standard,” Dr. Degennaro said. “Representatives of six governments attended: France, West Germany, Italy, Japan, the United Kingdom, and the United States. Canada joined the next year, so the group became the Group of Seven or G7.
“In 1981, the European Union became the eighth member of what would still be named the Group of Seven.”
The only real criterion to become a member of the G7 is to be an economically powerful democracy; hence, the group’s eventual admission of Russia at the behest of then-President Bill Clinton. Clinton hoped that by admitting Russia into the G7, then-Russian President Boris Yeltsin would be drawn closer to the West.
Russia’s relationship with Ukraine would ultimately be its undoing from the group.
A 16-Year Relationship
Russian-Ukrainian tensions date back more than 350 years. Russia was incorporated into the Group of Seven in 1998, making it the Group of Eight (G8). The G8 kept its members until 2014.
“During a conflict between Russian-backed rebels and Ukraine in 2014, Group of Seven leaders tried to isolate Russia with economic sanctions,” Dr. Degennaro said. “But G7 leaders couldn’t agree on how severe the sanctions should be, or who—or what—should be the target of those sanctions.”
The United States had hoped to target state officials, pro-Russia separatist leaders, and several Russian businesses and businessmen. However, the EU traded more extensively with Russia than the United States and was more dependent on Russian oil. The EU was concerned about damaging trade and, thus, hesitated to target Russia’s private sector.
“Germany’s international broadcaster, DW, [reported] that former Brandenburg State Premier Matthias Platzeck, the current head of the German-Russian forum, said that issues ranging from trade to security could only improve with Russia’s help,” Dr. Degennaro said. “Premier Platzeck cited environmental measures and nuclear non-proliferation agreements as areas of agreement between Germany and Russia.”
However, once Russia officially annexed Crimea, the G8 suspended its membership under the Hague Declaration of March 2014, and once again became the G7, which is what the name has remained to this day. In the eight years since, the Russia-Ukraine relationship remained rocky.
International Economic Institutions: Globalism vs. Nationalism is now available to stream on Wondrium.