BRUSSELS – Treasury Secretary Janet Yellen urged European countries on Tuesday to ramp up their spending to support Ukraine as Russian attacks on the country’s critical infrastructure showed few signs of abating.
The United States and Europe have closely coordinated the enactment of comprehensive sanctions against Russia in the nearly three months since its president, Vladimir Putinorder to invade. But they have been less consistent about the need to help prop up the Ukrainian economy and help rebuild it once the war is over.
Congress has already approved $13.6 billion emergency spending package for Ukraine He is expected to agree to another $40 billion in aid. While the European Union and international financial institutions were also making significant aid contributions, Ms Yellen said more needed to be done.
“I sincerely ask all our partners to join us in increasing their financial support to Ukraine,” Ms. Yellen said in a speech at the Brussels Economic Forum, according to her prepared remarks. “Our joint efforts are essential to help ensure that Ukrainian democracy prevails over Putin’s aggression.”
The Treasury Secretary is in the midst of a week-long trip to Europe, with Stop in Warsaw, Brussels and Bonn, Germany, where she will meet her counterparts at the G7 Finance Ministers Summit. Aid to Ukraine is expected to be a central topic at that meeting.
Ms Yellen said Ukraine’s financial needs are immediate and that it lacks the funding to pay soldiers, retirees and staff to keep its government running.
“What is clear is that the bilateral and multilateral support announced thus far will not be sufficient to meet Ukraine’s needs, even in the short term,” she said.
It remains to be seen if her call will be heeded. European countries face economic stresses of their own, including rapid inflation and high energy costs, and significant challenges lie ahead as they look to distance themselves from Russian energy.
Ms Yellen said the US would help break Europe’s dependence on Russian energy, in part by increasing US exports of liquefied natural gas. She acknowledged that some climate targets to reduce emissions could be set back by the need to rely on coal and fossil fuels, but said the current impasse should be a reminder of the need to “redouble our efforts in clean and renewable energy.”
Energy is another major issue that policy makers will discuss at the G7 Finance Ministers Summit in Bonn later this week. The United States is expected to pressure the European Union to consider alternative options ahead of its plan to introduce a phased Russian oil embargo by the end of the year.
Treasury officials said Tuesday that they want Europe to consider pricing mechanisms such as a price cap or tariffs that would undermine much of Russia’s oil profits while still giving the country enough incentive to continue production.
The Russo-Ukrainian War: Key Developments
in Mariupol. The bloodiest battle of the war in Ukraine Finished in MariupolThe Ukrainian army ordered fighters holed up in a steel factory in the city to surrender. Ukraine’s decision to end the fighting has given Moscow complete control over a sweeping sweep of southern Ukraine, stretching from the Russian border to Crimea.
Treasury officials declined to share their estimates of the embargo’s impact on oil prices, but said the restriction on global oil supplies threatens to push prices up sharply at a time when inflation is already rising.
In her speech, Ms Yellen said Russia’s decision to cut off gas supplies to Poland and Bulgaria should be a lesson that Western countries should not replace national security with cheaper sources. This situation has now left them vulnerable to countries that can use their abundant natural resources to disrupt markets.
It cited China as a concern due to its supply of rare earth metals used in aircraft, cars and high-tech batteries.
“China is building a trailing market share in some technology products and is striving for a dominant position in the manufacture and use of semiconductors,” said Ms. Yellin. “China has used a variety of unfair trade practices in its efforts to achieve this position.”
However, Ms. Yellen made it clear that she was not calling for more protectionism or a reversal of globalization. Instead, she said, countries should not put all their eggs in one basket when it comes to international trade.
“My point is to suggest that we should think of ways to maintain free trade and at the same time reduce some of these risks,” she said.
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