WASHINGTON – Treasury Secretary Janet Yellen warned a House panel Wednesday that Russia’s aggression in Eastern Europe will have “enormous economic repercussions in Ukraine and beyond.” She added that the rising price of energy, metal, wheat and corn that Russia and Ukraine produce "is going to escalate inflationary pressures as well.”
Russia’s invasion “including the atrocities committed against innocent Ukrainians in Bucha, are reprehensible, represent an unacceptable affront to the rules-based global order, and will have enormous economic repercussions for the world," she told the House Financial Services Committee.
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Her remarks were part of her annual testimony on the state of the international financial system.
Along with touching on the need for food and energy security and debt sustainability globally, Yellen called on Congress to provide support to the International Monetary Fund and World Bank organizations, which have provided grants and humanitarian funds financing to the world’s poorest and most vulnerable.
“Globally,” she said, “spillovers from the crisis are heightening economic vulnerabilities in many countries that are already facing higher debt burdens and limited policy options as they recover from COVID-19.”
“The sanctions we’ve placed on Russia are pushing up the price of energy. It’s a price that’s important to pay to punish Russia for what it’s doing in Ukraine,” she added, drawing on how the conflict is impacting Americans at home.
Inflation has reached 40-year highs as an inflation metric closely monitored by the Federal Reserve jumped 6.4% in February compared with a year ago, the largest year-over-year rise since January 1982.
The United States and Western allies have imposed an avalanche of sanctions against Russia in the first weeks of the war and administration officials in recent days have put more focus on closing loopholes that Russia might try to use to circumvent them.
On Wednesday morning, the U.S. announced more sanctions, this time targeting Russian President Vladimir Putin’s two adult daughters and toughening penalties against Russian banks in retaliation for “war crimes” in Ukraine.
“Treasury is committed to holding Russia accountable for its actions so it cannot benefit from the international financial system,” Yellen said.
Lawmakers also questioned Yellen on China and the threat of an invasion of Taiwan as the U.S. and its allies continue to impose sanctions on Russia. She said the U.S. is prepared to impose sanctions against China if Beijing moves aggressively toward Taiwan, as some fear it might.
“I believe we've shown that we can in the case of Russia,” she said. “I think you should not doubt our ability to resolve to do the same in other situations.”
She was also asked about Russia's involvement in the G-20 summit, which is set to take place in Indonesia later this year.
The Indonesian government has said it would hold the G-20 Summit impartially, resisting calls to exclude Russia.
“I’ve made clear to my colleagues in Indonesia that we will not be participating in a number of meetings” at the annual summit where Russia would be involved, Yellen said.
White House press secretary Jen Psaki clarified later in the day that Yellen was referring to ministerial-level meetings and that the U.S. would not boycott the summit in its entirety.
“It shouldn’t be business as usual,” she said.
President Joe Biden has said he would like to kick Russia out of the G-20.