G7 leaders discuss further sanctions against Russia

The meeting in the Bavarian Alps is aimed at putting pressure on the Russian economy without fuelling further rises in inflation.

The G7 leaders are planning further sanction targeting Moscow's military production, and Russia's revenues, including from gold, a US statement said.

While Kyiv endured the heaviest bombing it has seen in weeks, leaders have discussed putting a price cap on Moscow's oil revenues and raising new tariffs on Russian goods.

Oil embargoes, implemented by the US and Canada, and planned by the end of the year by most of the EU, have failed to cut Russia's revenues, and added to a surge in energy prices.

US treasury secretary Janet Yellen has proposed to tackle it with a price cap, in exchange for sanctions relief for those trading Russian oil.

The economic powerhouses also plan to "restrict Russia's access to key industrial inputs, services, and technologies produced by our economies," especially those supporting Russia's industrial base, according to the US statement.

The sanctions would target major state-owned defence enterprises, defence research organisations, and dozens of other defence-related entities and individuals, the US statement said.

However, EU countries would need unanimity among the 27-member bloc to impose a new round of sanctions.

Hungary, which has held up for a month the latest, seventh, round of EU sanctions over its objections to banning oil imports, said it is open to discussing new sanctions, bar on energy, although Budapest considers the sanctions strategy a "dead-end street".

Balázs Orbán, political director for the prime minister Viktor Orbán told EUobserver last Friday that it is time to consider whether the sanctions strategy is working, adding that "we have concerns."

"If Europeans are thinking that except for the energy they still want to have sanctions against all the concerns raised by not the Hungarians, but the Americans, and Westerners or the expert, think tank people, we can sit down and discuss it," Orbán said, underlining that energy is a red line for Hungary.

Default

Meanwhile, US president Joe Biden and EU Commission president Ursula von der Leyen have accused Russia of continuing "to use natural gas as a political and economic weapon" in a joint statement.

The two leaders said Moscow's "politically-motivated disruption" to gas supplies to several EU member states underlines the need to reduce Europe's reliance on Russian energy.

The White House said on Monday that Russia had defaulted on its foreign sovereign bonds on Monday for the first time since 1917, a claim that later Moscow rejected.

"There are no grounds to call this situation a default," Kremlin spokesman Dmitry Peskov said.

Peskov argued that Russia made bond payments due in May, but the fact they had been blocked by Euroclear, a bank which then distributes the payment to international creditors, because of Western sanctions.

Peskov said it was "not our problem".

The G7 leaders also called on Moscow to "cease, without condition, its attacks on agricultural and transport infrastructure and enable free passage of agricultural shipping from Ukrainian ports in the Black Sea."

The G7 gathering is set to be followed by a Nato leaders-level summit in Madrid, later in the week.

Meanwhile, Russian missiles hit a shopping mall with reportedly some 1,000 people inside in the central Ukrainian city of Kremenchuk on Monday.