G7 pledge on Iran sanctions is bad news for MTN
Finance leaders from the Group of Seven (G7) industrial democracies have condemned Iran’s attack on Israel and pledged to continue work on “all possible avenues” to harness frozen Russian sovereign assets to aid Ukraine.
In a joint statement issued after a meeting, the G7 finance ministers and central bank governors said they would “ensure close co-ordination of any future measure to diminish Iran’s ability to acquire, produce, or transfer weapons to support destabilising regional activities”.
The comments are bad news for companies such as MTN, which may have to review its operations and compliance frameworks to ensure it is aligned with the possible new sanctions.
The ministers met on the sidelines of the IMF and World Bank spring meetings in Washington and said they viewed risks in the global economy as “more balanced” amid recent resilience to multiple shocks, with inflation receding.
“Central banks remain strongly committed to achieving price stability and will continue to calibrate their policies in a data-dependent manner. Price and financial stability are a prerequisite for sustainable and balanced growth,” the officials said.
But the group said there were significant geopolitical risks to the outlook, primarily from Russia’s war in Ukraine and conflict in the Middle East, which “could affect trade, supply chains and commodity prices”.
FROZEN ASSETS
The G7 finance officials said they were strongly committed to help Ukraine meet urgent short-term financing needs as it struggles against Russia’s invasion, including harnessing extraordinary revenues stemming from frozen Russian assets.
“We reaffirm our determination to ensure that Russia pays for the damage it has caused to Ukraine. Russia’s sovereign assets in our jurisdictions will remain immobilised until then, consistent with our respective legal systems,” the officials said.
The statement did not include a specific plan for the assets, but said work would continue “on all possible avenues by which immobilised Russian sovereign assets could be made use of to support Ukraine” with a view to presenting options to G7 leaders at a June summit in Italy.
Deputy US treasury secretary Wally Adeyemo said the G7 discussions on frozen Russian sovereign assets, estimated at $300bn, were still a “work in progress”.
Adeyemo told an event hosted by the Semafor news outlet that finance ministers were doing technical work to come up with options that still included building a strong legal foundation for outright seizure of the assets.
“We’re talking through a number of different options. One
of them is seizure, but another is collateralising, or even using the windfall profits or the interest from these assets to fund a loan,” Adeyemo said.
Because the bulk of the assets were held in Europe, it was important that the US worked closely with European allies on the issue, he said.
French finance minister Bruno Le Maire said on Wednesday that the G7 needed to be in a position to harness the interest earned on the assets.
“These revenues are estimated at €3bn-€5bn a year, depending on the level of the interest rates,” Le Maire said.
“So our proposal is to better understand and better define how this €3bn-€5bn could be used over the next month to help Ukraine and to help the Ukrainian government. So let’s focus on that question.”