David Lawder, Dan Burns

(Reuters) – U.S. Treasury secretary Janet Yellen stated Wednesday that Russia should be removed from the Group of 20 major economics forum. If Russian officials appear, the United States would boycott “a few G20 meetings”.

At a hearing of the U.S. House Financial Services Committee, her comments raised concerns about the future role of the G20 in light of Russia’s invasion.

The club was established in 2008 and has been a major international forum on issues ranging from cross-border debt relief and COVID-19 relief. It also includes China and India as well as Saudi Arabia, which have not condemned Russia’s actions.

Yellen said to legislators that Russia’s incursion in Ukraine and Bucha civilian deaths “are reprehensible and represent an unacceptable affront the rules-based international order and will have immense economic repercussions for Ukraine and beyond.”

Recent months have seen the United States, along with its allies, place greater emphasis on G7. This grouping is comprised of industrial democracies. These countries are aligned and use G7 meetings for coordination to respond to Russia’s aggression in Ukraine.

Yellen stated that the Biden administration is trying to force Russia out of participation in international institutions. However, she acknowledged the fact that Russia would not be expelled by the International Monetary Fund due to its rules.

“President Biden has made it clear and I definitely agree with him that it can’t be business as usual Russia in any financial institutions,” Yellen responded to a question. “He has asked that Russia is removed from the G20. I’ve also made it very clear to our Indonesian colleagues that we would not participate in a lot of meetings if Russia was there.” Yellen responded.

Indonesia will be the host of a Finance meeting in July as well as a Leaders Summit in November.

Later, a Treasury spokesperson stated that Yellen meant an April 20 G20 meeting of central bank governors and finance ministers. This was on the sidelines to the IMF Spring Meetings in Washington as well as associated deputies.

Russia will not be present at the April finance meeting, but it is possible to attend in person or virtually.

Russia claims that President Vladimir Putin will attend the G20 Summit in Bali in this year’s. China has also supported Russia to remain in the group.

ENERGY FLEXIBILITY

Yellen spoke out as the Biden administration declared a new set of sanctions against Russia. These include banning Americans investing in Russia and locking Sberbank (Russia’s biggest lender and holder a third) from the U.S. Financial System along with other institutions.

Transactions that allowed European allies the purchase of Russian oil were however exempted under special Treasury licenses.

Yellen stated that Russian energy transactions should be flexible because European countries are still heavily dependent upon Russian natural gas and oil. She also said they were committed to making that transition as fast as possible.

She acknowledged, however that it would be a slow process.

Yellen stated that a complete ban on Russia’s oil exports, which is the third largest producer of crude oil after Saudi Arabia and the United States, could lead to “skyrocketing” price increases, which would be detrimental for both Europe and the United States.

In her remarks, she said that current high prices might encourage oil companies in America and around the world to boost production within the next six-months. That, together with Biden’s release oil from the U.S. Strategic Petroleum Reserve could allow for tighter sanctions on Russian oil.

CHINA WARNING

Yellen sent a warning to China, stating that Treasury is prepared to use its sanctions to punish Beijing in the case of Chinese aggression against Taiwan. Taiwan is a claimant province.

When asked if America would consider such steps in the event of Taiwan’s threat, she replied: “Absolutely. We have shown we are capable, I think. Russia was the first to be subject to our threats of serious consequences. We have imposed severe consequences. I believe you shouldn’t doubt our capability and be determined to do so in all other circumstances.