In response, leaders of the G7 block of advanced economies meeting in southern Germany have been examining American proposals for what Janet Yellen, the US Treasury secretary, has termed “price caps or a price exception”. This could work via a mechanism that restricts insurance or financing of Russian oil shipments over a certain value.
So, Russia offers to insure itself, then sells on CIF terms, not FOB.
Ie, pay when it’s delivered, not when it sets sail. That solves – much of – the financing problem. This can also be done as the metals markets show. Some metals are habitually traded FOB. Others CIF. Shrug.
How does one cap the prices of goods sold by another country? Sovereignty and all that. “The UK Parliament may make it illegal to smoke on the streets of Washington DC, but it is a different matter if it can enforce it.”
@jgh: They propose to restrict finance and insurance rather than directly control the price. Presumably by restricting G7 companies, but who knows with this lot – they might try to make it a requirement for dealing in dollars.
Tim: Your mistake is to assume that effectiveness is relevant. The goal of sanctions is to look like they’re doing something while hiding their impotence.
Concerning the food fuss, I see that Oz has a huge wheat crop. But it’s a strain for the infrastructure to export it. And covid means the visas for the labour to harvest it haven’t been issued.
If Yellen is for it I’m against it. Or do I misjudge the little lady?
The sanctions in general have been self-harming and stupid. Maybe the feds will have a good time on Suleiman Kerimov’s stolen yatch, but the rest of us face insane fuel and energy prices at the worst possible moment. Not sure why I’m supposed to be delighted at the destruction of the Mittelstand or Japanese people being forced to turn off the AC in the middle of summer, or how this helps Ukraine in any way.
Trying to rig Russian oil prices seems like the kind of genius plan that’ll just accelerate de-dollarisation and the BRICS building parallel economic structures outside of American control.
But maybe that’s the plan after all – the US can no longer boss around China and its global allies, but they can try to run the Western world as a kind of Yanqui Manchuoko, with captive markets and tame local authorities forcibly split off from the new mainstream of global commerce and kept safely within DC’s orbit.
Trying to rig Russian oil prices seems like the kind of genius plan that’ll just accelerate de-dollarisation and the BRICS building parallel economic structures outside of American control.
They can try building them (we’ve seen the corrupt result of Chinese tyres and Russian maintenance) but will people trust them? Brazil, Russia, India, China and South Africa. Will they even trust each other? The headquarters is in China (it was closed during one of their brilliant Covid-beating lockdowns). Seriously?
. . . forcibly split off from the new mainstream of global commerce . . .
Lol.
PJF – They can try building them (we’ve seen the corrupt result of Chinese tyres and Russian maintenance) but will people trust them? Brazil, Russia, India, China and South Africa. Will they even trust each other?
Who knows? But they’re losing trust in the American regime, which has managed to annoy and alienate the Chinese, LATAMs, Africans, Indians and Arabs to varying degrees.
The US as an imperial power is in the tits up phase of its evolution, we know from experience that alternatives don’t fail to materialise just because it’s difficult to see how they could work under the status quo. History is littered with the corpses of indespensible nations.
Lol
The BRICs currently have 40% of the world’s population, 25% of global GDP and 16% of global trade, and are expanding prodigiously while the US and its overseas clients are desperately trying to abolish their own economic future via Net Zero, unsustainable debt and insane orgasms of money printing.
So, lol indeed. I’d bet a couple of cheeky Yuan on the average Chinaman enjoying a higher standard of living than the average Westie by the middle of this century. Unless we count sex changes for children as an economic good.