The Japan Times - Yellen says Russia hurting as G7 discuss more sanctions

"The way I see it, our sanctions have had a very significant negative effect on Russia so far. While by some measures the Russian economy has held up better than might initially have been expected, Russia is now running a significant budget deficit," Yellen said ahead of a Group of 20 meeting in India.

"It is finding it extremely difficult because of our sanctions and our export controls to obtain the material it needs to replenish its munitions and to, for example, repair 9,000 tanks that have been destroyed because of the war," Yellen told reporters in Bengaluru.

"We see that it has led to an exodus of some of the most qualified scientists and entrepreneurs in the Russian economy, and an exodus of foreign investment. Russia is running down its holdings in its sovereign wealth fund so... the price cap that we have put on Russian oil is clearly substantially reducing Russia's revenues," she said.

Yellen added that Russian President Putin "thought he would achieve a victory at minimal cost, in the words of CIA director (William) Burns... One year later Putin's war has been a strategic failure for the Kremlin."

She said the global economy was "in a better place" than predicted a few months ago in the wake of the Covid pandemic and Russia's invasion.

"In the fall, many were worried about a sharp economic slowdown across the world. The challenges we face are real and the future is always uncertain but the outlook has improved," Yellen said.

The comments came before a meeting of Group of Seven finance ministers in Bengaluru on Thursday to discuss further sanctions and more financial help for Ukraine.

A senior US official said last week that the United States and its G7 allies planned to unveil "a big new package of sanctions" around the February 24 anniversary, including measures to crack down on the evasion of existing sanctions.

"We are seeing the Russians get quite clever -- everything from importing laptops and refrigerators through third countries, including sometimes our own countries, which they then strip-mine for chips and other things that go into their war machine," said Victoria Nuland, under secretary of state for political affairs.

G20 finance chiefs and central bank heads are due to meet on Friday and Saturday in Bengaluru to discuss the dire economic effects of the war and possible debt relief for poorer nations.

About 15 percent of low-income countries are in "debt distress", the International Monetary Fund has said. A record 349 million people in 79 countries face "acute food insecurity".

Any discussion on Ukraine is awkward for host India, which has not condemned the invasion. India wants to avoid the word "war" in any final statement, Bloomberg News reported.

It was unclear what level of involvement Russia would have in the wider G20 meeting. German officials said no high-ranking Russian representative will be present.

A meeting of G20 foreign ministers in New Delhi on March 1 and 2 could be tense, with Russian Foreign Minister Sergei Lavrov expected to attend alongside US Secretary of State Antony Blinken.

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H.Hayashi--JT