Breaking news about the war between Russia and Ukraine: live updates

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Decided over the weekend prohibit the purchase of freshly mined and refined gold from Russia is the latest attempt by the United States, Britain and their allies to stem the wave of sanctions against Russia in response to its four-month-long invasion of Ukraine.

The announcement, made by President Biden and other G7 leaders meeting this week in Germany, builds on steps already taken to cut Russia off from the international financial system, depriving it of the extra revenue that helps fund its war. in Ukraine and punish Russian President Vladimir Putin and rich business executives from his entourage.

Allies of Ukraine most trade banned with Russia, froze hundreds of billions of dollars worth of Bank of Russia assets held in their own financial institutions, and banned Russian banks from using the messaging system at the heart of the international payments system known as QUICK.

Russia, one of the world’s largest gold producers, has ramped up production of new gold to offset some of the paralyzed assets, said Christopher Swift, a national security lawyer at Foley and Lardner.

The London-based Bullion Market Association, a major center for the global gold trade, had already suspended transactions with six Russian silver and gold refineries in March.

mr. Swift, who previously worked in the Treasury’s Office of Foreign Assets Control, said: “To offset the reserves held by Russian companies and oligarchs, they injected new gold into the network. G7 is closing access to this new gold.”

Russian billionaire business tycoons are buying up gold bars in an attempt to soften the impact of the sanctions. British Prime Minister Boris Johnson underscored the point on Sunday, saying the move would “deal a direct blow to Russian oligarchs.”

Whether this latest move, scheduled to be officially announced on Tuesday, will also be in Mr. Johnson’s words – “to strike at the very heart of Putin’s war machine” – are more controversial.

Ukraine’s allies have struggled to keep the pressure on and deprive Mr. Putin of resources for their war machine without putting too much risk on their own economy. Balancing is especially difficult for the European Union, which is heavily dependent on Russian oil and gas.

Soaring oil prices, combined with huge appetite for fuel around the world, mean Russia is raking in even more money from the sale of crude oil than before the war, despite discount.

After weeks of tense negotiations, the European Union last month agreed to largely ban imports of Russian oil by the end of this year, as well as ban European countries from insuring tankers carrying Russian oil. But so far, the question of whether to ban Russian gas, a replacement for which is much harder to find than oil, has not been discussed. The German government and industry leaders have warned that the gas embargo would be a disaster for its economy.

Speaking about the imposition of sanctions, Jeffrey Schott, a senior fellow at the Peterson Institute for International Economics in Washington, said that the mounting pressure on the Russian economy “is going according to plan.” He added that “if there are any surprises, it’s how consistent policy coordination has been across the Atlantic and East Asia.”

Various members of the alliance looked for ways to increase the penalties one notch at a time. The gold ban “gives G7 governments some runway and room to pick up the pace,” said Andrew Scheuer, a Sidley lawyer who advises companies on sanctions compliance.

The distinction between newly mined and refined gold and gold that was exported or bought before the ban is in line with the sanctions framework, which prohibits new investment in Russian companies but allows existing investment, according to Mr. J. Scheuer.

The new ban also aims to deprive Russia of additional revenue from the export of gold, which is used to make jewelry, in some industrial processes and for investment. As is often the case during crises, the purchase of gold for investment has jumped as the coronavirus pandemic has begun to devastate the global economy. Investors expect it to maintain its value. Central banks, including the Federal Reserve, bought Russian gold through intermediaries.

According to the British government, last year Russia earned more than $15 billion from gold exports. With gold widely held in central bank reserves around the world, Russia had a ready market.

“Russia is a major gold producer and it is a reserve asset,” said Lucretia Reichlein, a professor at the London Business School. “If they can’t sell, then that source of income is gone.”

After the first rounds of sanctions halted most of the existing international gold trade, Russia’s central bank announced that it would resume purchases of domestically produced gold, which was also seen as a way to support its currency. Gold owned The Central Bank of Russia is estimated at between $100 and $140 billion.

“Essentially, this is a gradual tightening of sanctions, not a significant tightening,” he said. Swift of Foley and Lardner said. “If your goal is to undermine Russia’s economic ability to wage war in Ukraine, this is a necessary but not sufficient measure.”

But he added; “If the G7 wants to have a strategic impact, they really need to think about what they’re going to do with Russian gas.”