TELFS, Austria — As President Joe Biden prepares to meet with world leaders in Europe next week, his top domestic priority of inflation will remain high on the agenda, amid fears that the global economy could slide into recession as Ukraine rages on. War is on.
The G7 summit in the Bavarian Alps, starting on Sunday, will give Biden the opportunity to hold talks with leaders of the wealthiest democracies on ways to reduce rising global prices, while accusing Russia of ending the war in Ukraine. will continue to exert pressure, including as a way to promote global energy. Possible price limits on production and export of Russian oil or gas.
The meeting with the leaders comes at a crucial time for Biden, as Democrats enter a summer battle to keep control of Congress in the midterm elections and some economists and Biden’s own Federal Reserve chair are predicting that the U.S. will continue this year. may slip into recession at the end of the year. or next. The visit offers Biden an opportunity to bring voters back home that he is pushing to address the economic pressures he is facing.
“We expect the global economy to be an important point of discussion among G7 leaders,” a senior administration official said. “I think there’s a lot of focus on what each country is taking domestically, what steps can be taken together to address the pressures we’re seeing on the energy security front. The challenges we are seeing regarding food security include many low-income and vulnerable countries.
The meeting in Germany is part of a broader range of international travel for Biden, who prides himself on his foreign policy acumen after decades on the Senate Foreign Relations Committee. After Germany, he will also go directly to Spain to meet NATO leaders and will head to Israel and Saudi Arabia in July. The tour stops in Japan and South Korea in May.
The G7 summit will be attended by leaders from Canada, Japan, the UK, Italy, France and Germany, which together with the US make up half of the global economy.
While prices in the US are rising faster than in other G7 countries, inflation has been a concern globally as a result of Russia’s invasion of Ukraine and supply chain disruptions due to the pandemic. Developing countries have been particularly hard hit, with inflation in Estonia above 20 percent, Sri Lanka defaulting on its debt, and Pakistan at risk of economic collapse. China’s economic growth has also slowed after the Kovid lockdown continued for months.
As well as focusing on the economy, the G7 countries also plan to increase pressure on Russia and announce new steps to show support for Ukraine, as well as “advance a world vision based on freedom and openness.” With extensive efforts, no coercion, no aggression, no spheres of influence,” said a senior administration official.
“There are some very significant headwinds here. You’re stuck in Ukraine, you’ve ramped up inflation, a series of crises from food to energy to helping the climate, so it’s going to be a very challenging set of meetings,” said senior economics senior. said Matt Goodman, vice president of the Center for Strategic and International Studies.
At home, Biden has acknowledged that there is little he can do in the near term to help with rising gas and food prices, and that he has been unable to get Congress to act on legislation, he says, that will reduce drug prices. Will help struggling consumers by reducing and providing clean energy tax credits.
Biden on Wednesday called on Congress to implement a three-month gas tax holiday, a measure that is unlikely to get enough votes to pass and leaves some of the tools left to him to address high gas prices. signals to.
The president has tried to make the case for the most inflationary American consumers in 40 years and record gas prices are the result of Russia’s invasion of Ukraine and oil companies profiting from the war as Republicans try to pin blame on his policies. Huh.
“Protecting freedom, protecting democracy was not going to come at no cost to the American people and the rest of the free world,” Biden said in remarks on gas prices from the White House on Wednesday.
“We cut off Russian oil in the United States and our partners in Europe did the same, knowing we would see higher gas prices,” Biden said. “We could have turned a blind eye to Putin’s murderous ways. The price of gas may not have risen the way it is. I believe it would have been wrong. I believed in him then, and I still believe in him now. The free world had no choice. ,
Officials with G7 countries are meeting in Germany ahead of the summit to work on a coordinated response to reduce inflation by raising interest rates in hopes of cooling the economy to contain price rises while avoiding a global recession. To be.
Among the economic topics leaders are expected to discuss are ways to increase available oil, as well as continue to put pressure on Russia.
“If there is one thing these G7 leaders can do, how can we bring more oil to market, especially if we continue to restrict Russian oil,” said Josh Lipsky, director of the Atlantic Council’s Geoeconomics Center.
Another move being considered by Biden to try to reduce costs for consumers is lifting all or some of the $350 billion in tariffs the Trump administration imposed on Chinese imports. Treasury Secretary Janet Yellen, who has been a critic of Trump-era tariffs, said during a congressional hearing earlier this month that some cuts could be made, but cautioned that the impact on consumer prices “is a panacea.” There will be no “inflation.”
Goodman said that while the war in Ukraine has been a major contributor to the rise in energy and food prices, G7 leaders have shown no signs of wavering on their pressure campaign against Russia, although inflation may play a role in their decisions on possible moves. Will do, Goodman said.
“It does have an impact on this group, and in particular I think President Biden is prepared to consider potential new sanctions that could further exacerbate price increases,” he said. “I think, to the extent they take further action, they’re going to see things that don’t have an impact.”
During a meeting in May of G7 finance ministers, officials said they planned to continue reducing oil imports in line with the EU’s vision of phasing out Russian oil by the end of the year.
A strategy G7 countries are discussing to reduce the impact on inflation would be agreeing a price cap on Russia’s energy exports that would set limits on how much countries would pay for Russian oil or gas.
But there are indications that the removal of dandruff oil has not had the intended effect. According to a report by the Center for Clean, Russia earned a record amount of revenue since the start of the war due to rising oil prices, despite efforts by countries such as the US and Canada to punish Russia by cutting oil imports. has done. Energy and fresh air.
“We expect Ukraine to be at the forefront of negotiations,” the senior administration official said. “And we look forward to rolling out a concrete set of proposals to increase pressure on Russia to support Ukraine during the summit.”