LDN - Business

U.S., allies 'will not be indifferent' to those who undermine Russia sanctions, Yellen warns

[April 13, 2022] By Andrea Shalal and David Lawder

WASHINGTON (Reuters) - Countries that are seeking advantage by failing to condemn Russia's "heinous war" against Ukraine are being short-sighted and will face consequences if they undermine Western sanctions, U.S. Treasury Secretary Janet Yellen said on Wednesday.

The United States and its partners "will not be indifferent" to actions that undermine the sweeping sanctions they have imposed on Moscow and Russian President Vladimir Putin over the invasion, she warned in wide-ranging remarks prepared for an event hosted by the Atlantic Council think tank.

Yellen said the war between Russia and Ukraine had redrawn the world economic outlook and the Biden administration was resolute in its commitment to hold Russia accountable for its "horrific conduct" and its violations of international law.

"Rest assured, until Putin ends his heinous war of choice, the Biden Administration will work with our partners to push Russia further towards economic, financial, and strategic isolation," she said.

The Russian invasion had galvanized many countries and companies to take a unified stance and severe business ties with Moscow, in a way that could help shape the global response to other "unmet global challenges," Yellen said.

But some countries were still "sitting on the fence, perhaps seeing an opportunity to gain by preserving their relationship with Russia and backfilling the void left by others," Yellen said, without naming any specific countries.

"Such motivations are short-sighted. The future of our international order, both for peaceful security and economic prosperity, is at stake," Yellen said. "And let’s be clear, the unified coalition ... will not be indifferent to actions that undermine the sanctions we’ve put in place."

Yellen's remarks come days after President Joe Biden warned India, which has not imposed sanctions on Moscow, that buying more oil from Russia was not in India's interest and could hamper the U.S. response to the war in Ukraine.

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U.S. Treasury Secretary Janet Yellen testifies before a House Financial Services Committee hearing on "the State of the International Financial System,” on Capitol Hill in Washington, U.S., April 6, 2022. REUTERS/Tom Brenner

Washington and its allies have sought to pressure India, China and other "fence-sitters" to take a clear stance opposing Russia and what it has called a "special military operation."

Yellen said Biden's multilateral approach had enabled the Group of Seven advanced economies to impose significant costs on Russia, and made clear they were acting in support of a rules-based global order that protects peace and prosperity.

She said the same approach - and shared values - could help solve other big issues, such as climate change, ending the COVID-19 pandemic, and supporting low-income countries.

Yellen said changes were also needed to "modernize our existing institutions — the (International Monetary Fund) and the multilateral development banks — so that they are fit for the 21st century."

Her calls come after Biden said Russia to be excluded from the Group of 20 major economies.

"Some may say that now is not the right time to think big," she said, citing the war and the lingering pandemic. "Yet, I see this as the right time to work to address the gaps in our international financial system that we are witnessing in real time."

U.S. officials began crafting proposals to create the IMF, the World Bank and the post-war international financial architecture in 1941, early in World War Two, and a new architecture was needed now, she said.

"As then, we ought not wait for a new normal. We should begin to shape a better future today," she said.

(Reporting by Andrea Shalal and David Lawder; Editing by Lincoln Feast.)

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