Via Teleconference
8:04 A.M. CEST
MODERATOR: All right, so in the interest of time, we’re going to go ahead and get started. Thanks for your patience. Just some logistical things we were dealing with this morning.
So we’re — thanks for coming. Thanks for joining the background call today. This call is on background, attributable to “senior administration officials.” And it’s to preview day one in Germany today.
So for your awareness, not for reporting, the speakers on the call are [senior administration official] and [senior administration official]. They’re both going to just give some quick remarks at the top, and then we’re going to try to take as many questions as we can, given the time limitations that we’re going through today.
So we’re going to start with [senior administration official], and then we’ll go to [senior administration official]. So, [senior administration official], over to you.
SENIOR ADMINISTRATION OFFICIAL: Great, thanks. Good morning, everybody. And welcome to Bavaria. Sorry for running a little bit late this morning; was getting through security on the way up to the Schloss.
The President is looking forward to kicking off his Europe trip with a meeting with the German Chancellor. The administration has been investing very heavily in our bilateral relationship with Germany since he took office, including engagements last summer with former Chancellor Merkel. And the President has developed a very close and effective working relationship with Chancellor Scholz, who took office on December 8th.
The President, just to remind, spoke to him two days after that and then hosted him for an Oval Office meeting in February. They’ve since had a number of bilateral calls, as well as broader calls with other transatlantic and G7 leaders, particularly around the crisis in Ukraine. So this meeting is going to provide a good opportunity to affirm the deep and enduring ties between our two countries.
In terms of the meeting agenda, expect that Russia and Ukraine are going to be at the top of the list, including our continued close coordination on the political and diplomatic front; ongoing conversation about the security assistance that we, as well as other allies and partners, are providing to Ukraine; financial supports; and as well as continued efforts on sanctions to impose economic costs on Russia.
But it’s a full agenda, as it is our bilateral relationship. So I would expect there will also be discussion of transatlantic defense issues, especially in anticipation of the NATO Summit, which we’ll be heading to from here. This meeting will be a good opportunity for them to check signals on the G7 under the German presidency, and given the next couple of days of meetings that we have here with the G7, and then also an opportunity to discuss our shared interest in a range of other global challenges, including climate change and energy.
I would expect that the President will be thanking Chancellor Scholz for his leadership of the G7 during what’s been a truly unprecedented time in Europe over the last number of months.
In addition to coordinating the G7 response on Ukraine, the President will undoubtedly recognize the Chancellor’s leadership on other shared challenges, including climate change and economic resilience.
Many of the priorities that Germany has chosen for its G7 dovetail very closely with the administration’s focus, including on issues such as health, climate, economic resilience, and COVID.
So let me leave it there for now on the bilateral side, and then happy to answer any other questions after [senior administration official] is done.
MODERATOR: Great. [Senior administration official], over to you.
SENIOR ADMINISTRATION OFFICIAL: Thanks, [moderator]. So, after his bilateral meeting with Chancellor Scholz, the President will participate in the G7 Summit. The first session will be on the global economy. And I think you can expect that leaders will be focused on discussing some of the core problems that are at the top of mind for all of us across the board, things like energy security challenges, the food security challenge globally, the disruptions generally that are emanating from Russia’s invasion of Ukraine.
Even as the leaders, including President Biden, will be focused on the challenges and disruptions of the moment, while — we should also recognize that the U.S. is positioned to weather those challenges because of the strong economic leadership of President Biden and the policies and investments he is putting in place.
The President obviously passed historic rescue legislation last year, has achieved significant bipartisan infrastructure legislation. These have put the United States in a position both to respond to the crisis that the President inherited economically and put the United States in a strong position, as well as to invest in our resilience and ongoing economic strength looking ahead.
Of course, the President has also taken significant steps to address the energy crisis, including — including historic releases from the Strategic Petroleum Reserve, and rallying the world through intensive diplomacy to make that a coordinated action across a number of different partners globally.
It’s important to note that it’s not just the United States that’s in a strong position to address the challenges and the headwinds that the globe faces, the G7 as a whole is collectively in a strong place.
The unemployment rate, to take one example, is as low across the G7 as a whole as it’s been at any time in the last 40 years.
So even as the United States, the G7 as a whole faces significant challenges, disruptions, headwinds as a result of Putin’s war, we should also recognize that the United States and the G7 are collectively in a strong position to address and manage those challenges.
I would expect that after the session on the global economy, you’ll hear leaders move on to talking about the ways in which we can help, in the G7, to invest in global infrastructure, in particular in the emerging and developing world.
That is going to be the topic of the second session that leaders meet around. Last year, G7 leaders agreed to explore offering positive alternatives to the infrastructure model that sell debt traps to low- and middle-income countries. That positive alternative from the G7 will also advance U.S. economic competitiveness and our national security.
You will hear how the President is moving forward this line of effort, along with announcements on new flagship product — projects. We’ll have a press call later on today that will offer more details on that effort, and not just the session that leaders will be having, but also the side events between the President and other leaders to announce those steps forward.
Of course, the President and other G7 leaders will continue to work to hold Putin accountable. Today, the U.S. and the UK are announcing that G7 leaders will ban imports of Russian gold. The official announcement will come on Tuesday.
The U.S. has rallied the world in imposing swift and significant economic costs to deny Putin the revenue he needs to finance his war. In this case, gold, after energy, is the second-largest export for Russia and a source of significant revenue for Putin and Russia.
The United States Treasury will issue a determination to prohibit the import of new gold into the United States on Tuesday, which will further isolate Russia from the global economy by preventing its participation in the gold market.
So, between the session on the global economy, the session on global infrastructure and the side event, as well, of course, as the bilateral meeting that [senior administration official] spoke to, it’s going to be a very action-packed day here and one that the President is looking forward to.
I’ll go ahead and pause there and hand it back to [moderator] to take questions.
MODERATOR: Thanks, [senior administration official]. And I don’t know if I said this, but just a reminder: This call is — the embargo on this call is going to lift after this call ends.
So if you have a question, could you just please raise your hand and I will do my best to get to as many as we can in the limited time that we have. So let’s go first to Sebastian Smith from AFP, please.
Sebastian, are you there?
[Senior administration official], can you still hear me?
SENIOR ADMINISTRATION OFFICIAL: Yes, I can hear you, [moderator].
MODERATOR: Okay, great. So maybe Sebastian might be having some trouble, so let’s go to Tamara Keith from NPR.
Tamara, can you unmute yourself, please?
Hey, Angela, are you making sure that people can unmute themselves? I’m not sure what’s going on here.
Hey, guys, give us just one minute to figure out what’s going on.
Hey, Angela, were you able to fix people’s un-muting problem?
Guys, sorry. Just give us a couple of minutes.
Q Hi, can you hear me?
MODERATOR: Yes. Is that Tamara?
Q This is Tam, yes.
MODERATOR: Yes. Okay. Thank you. Okay, sorry. Okay, go ahead, Tam.
Q It’s a muting miracle. Thank you for taking my question. I know that you are announcing the gold export limitations. Are you expecting there to be anything on sanctions with regards to further punishing Russia? Or is this gold thing, sort of, the primary pushback on Russia out of the G7?
And just a quick question about the Global Infrastructure Partnership. The event is happening on the margins. Should we read anything into it being on the margins and not part of the main program, or not?
SENIOR ADMINISTRATION OFFICIAL: On the first question, Tamara — this is [senior administration official] — I think you should expect to see a series of steps that are designed to increase pressure in an ongoing way on Putin and Russia.
We think that the step forward that’s being taken with gold is a very important illustration of the additional steps that we expect to be taken now and in the weeks ahead.
This is a key export, a key source of revenue, a key alternative for Russia, in terms of their ability to transact in the global financial system. Taking this step cuts off that capacity and, again, is an ongoing illustration of the types of steps the G7 can take collectively to continue to isolate Russia and cut it off from the global economy.
To your second question, I would — I would say, you know — and we’ll have more to say about this later this afternoon in the background call — you know, what you’re going to see is leaders speaking together in one of the plenary sessions of the G7 to global infrastructure, to the global infrastructure challenge, to what the G7 can do to provide an alternative, to provide a high-road, transparent alternative for low- and middle-income countries around partnering in their common future and in infrastructure together.
You know, what’s going to happen after they leave that session where they speak privately about that initiative and that priority is to go join together to talk about formally launching this joint infrastructure partnership.
So, I think far from the margins, this is a moment when leaders are going to speak privately to this core priority. Then they’re going to join together to speak about the action that they’ve collectively taken since last year’s declaration of intent in Carbis Bay, and now what it means to launch this with a year’s worth of work under their belts and to take the steps forward from here.
So I think, again, far from being on the margins, this is a very, I think, compelling choreography that you’re going to see with leaders reviewing together privately the steps that have been taken and the steps they intend to take, and then to describe those steps to the world at a joint event.
MODERATOR: Great, thanks. And also just add on to [senior administration official]’s, it’s just — I would not read into it. This is just how G7 and other G20 and other summits work. There’s, like, the plenary sessions, and then everything else is a side event. So I wouldn’t read anything into it at all.
All right, I think — so the muting problem should be fixed. So, Sebastian Smith from AFP, can you hear us and can you ask your question, please?
Q Hi, can you hear me now?
MODERATOR: Yes.
Q Perfect. Thank you. I’m out of the purgatory there.
So I wanted to ask about the gold measure. Is there a reason that the other members of the G7 didn’t sign up to this, if I understand it right — the European ones.
And another question related: Given the way the Russians seem to have found a workaround on their oil exports, how confident is the U.S. that gold won’t find another, you know, an alternative route to going through London, for example? Like, say, could it go via South Africa instead? Is it going to become a smuggler’s delight?
Just lastly, (inaudible), again related, if you could zoom out, (inaudible) out the summit — and it’s (inaudible) needed to review their progress on this whole campaign. How do they see it going in terms of pressuring Russia? Because, if I remember, the very first briefing for you guys ever did on — when you first announced sanctions, the language was things like, you know, “we’re going to cripple the ruble,” and it was pretty much “bring the Russian economy to its knees.” That, obviously, hasn’t happened and neither has the war really slacked off. So, is there something more to this that we should be thinking about thinking about? Thank you.
SENIOR ADMINISTRATION OFFICIAL: So perhaps we’ll take the last question first. I think that the collective efforts the G7 has taken with (inaudible) sanctions, export controls, and other measures against Russia is having a dramatic effect on the Russian economy.
The Russian economy is expected to shrink by double digits this year, and that’s just looking at headline GDP. If you look at things like imports, those have fallen off a cliff, likely to decline this year by 40 percent or more. Those are very substantial changes in the underlying economic conditions of the Russian economy. And those dramatic changes are attributable to the actions the G7 has taken collectively.
The other thing I’d observe is: The sanctions effort is intended to be cumulative, not just in the moment. And we’re already seeing the extent to which sanctions are degrading the productive capacity of the Russian economy, particularly in sectors like technology, like defense, like other key important industries.
And those impacts only accumulate over time, such that Russia’s ability to produce, Russia’s ability to wage war are going to decline over time as a result of the collective steps that the G7 has taken.
With respect to your question on gold, I would say, you know, I think one of the ongoing focuses of the sanctions effort has been to identify places where Russia, where others are seeking to evade the steps that have been taken. This is an ongoing area of focus by the G7 and an ongoing place where the G7, the United States, other partners — where we take steps forward to block off areas where evasion risk is becoming more prominent.
And, in fact, I think one way of thinking about the measure on gold is: To the extent that so many other avenues, with respect to Russia’s ability to interact with the global financial system, have been cut off, taking this step on gold is just yet another way to block off paths between the Russian economy and the broader global financial system.
So we will continue to identify places where evasion is a risk, continue to take steps to block off those paths. And the measure on gold in some ways is, in fact, another step forward to block off ways that Russia might seek to engage with the financial system by virtue of all the other ways that have now been cut off to them.
MODERATOR: Hey. And, sorry, I lost service. [Senior administration official], you answered the question about whether — if the G7 announcing the gold thing on Tuesday? Right?
SENIOR ADMINISTRATION OFFICIAL: Yes, this is —
MODERATOR: Yes.
SENIOR ADMINISTRATION OFFICIAL: Correct. Correct.
MODERATOR: (Inaudible.)
SENIOR ADMINISTRATION OFFICIAL: You will — exactly. So the U.S. and the UK have — are announcing today, but — when the G7 takes steps collectively, and you’ll see that on Tuesday. This will be a — this will be a G7 principle that is articulated.
MODERATOR: Thanks. All right, so we only have time for one more, unfortunately. So we’re going to go to Francesca Chambers from USA Today. Can you hear us? And can you ask your question, please?
Q I can. And I had difficulty at the beginning (inaudible) can attribute these before I get into the substance of the question?
MODERATOR: Yeah, of course. So this is — this call is on background, attributable to a “senior administration official.” And the contents of the call embargo will lift after this call is over. Does that help?
Q Yes. And we appreciate you having this, as always. However, it would facilitate greater public trust in our reporting if this information were attributable to named officials.
But again, as to the substance of the call, this question is for [senior administration official]. The U.S. has unsuccessfully pushed the EU to enact a full embargo on Russian oil and gas. For what new incentive or new information is President Biden prepared to offer his counterparts this week to entice them to support the sanctions?
And then I have a second question. Are there any additional measures or steps that the U.S. is preparing to take to try to speed up getting grain out of Ukraine faster? Poland says that construction of the silos that President Biden proposed will take three to four months to build.
SENIOR ADMINISTRATION OFFICIAL: Thank you. On the first, what I would say is: In fact, this is a place where the G7 has taken significant steps forward. At this stage, each of — the United States, Canada, the United Kingdom, the EU — has taken steps to ban the importation of Russian oil into their economies. So, far from a measure of — far from (inaudible), of course, that’s what the G7 has taken together. At this stage, again, you know, the U.S., the EU, Canada, the UK have all taken steps to embargo imports of Russian oil.
To you second question around food security, around speeding the facilitation of grain exports from Ukraine: Obviously, this is something that G7 leaders are focused on. But the thing I would start by saying is: There is a reason that there is a crisis in global food markets, why there is a crisis of global food security, and that is Russia’s invasion of Ukraine. This is their invasion, their blockade of Ukrainian ports, the inability of Ukrainian grain to reach global markets. This is why, at core, global food markets are under stress.
And G7 leaders are focused on what can be done to get that grain out of Ukraine, recognizing that that is — that is, at root, one of the key sources of this broader set of challenges. So, yes, I expect this to be a (inaudible) of discussions on the food security challenge (inaudible).
MODERATOR: Great. Thank you. And thanks, Francesca, for raising your point. You know, we’re endeavoring here to give you guys as many background and on-the-record opportunities as we can. And, of course, we’ll always try to do our best in that regard.
So as a reminder, this call was on background, attributable to “senior administration officials.” And the contents of this call — the embargo will lift after this call is over.
Thanks for bearing with us with the logistical problems in the beginning. Hopefully it’ll only (inaudible).
Thanks, guys. And talk to you later tonight.
8:31 A.M. CEST