The global economy can expect “enormous repercussions” from the war in Ukraine, U.S. Treasury Secretary Janet Yellen warned lawmakers on April 6.
Spillover from the war is heightening economic vulnerabilities in many countries already facing higher debt burdens and limited policy options as they recover from COVID-19, Yellen testified before the House of Representatives Financial Services Committee.
In response, the U.S. is ramping up efforts to have the international financial institutions (IFIs) provide relief to countries vulnerable to food and energy insecurity as well as unsustainable debt. The IFIs, including the International Monetary Fund and the World Bank, are under the Treasury Department’s purview. Yellen said their importance is paramount given the Russian invasion of Ukraine.
“Russia’s actions represent an unacceptable affront to the rules-based global order, and will have enormous economic repercussions in Ukraine and beyond,” the secretary testified. “Our goal from the outset has been to impose maximum pain on Russia, while to the best of our ability shielding the United States and our partners from undue economic harm.”
Energy needs in the European Union could be hit hardest if there were a complete blockade of Russian oil exports, Yellen said. “The issue with blocking oil exports from Russia is that many countries, especially in Europe, are very dependent on that oil,” she explained. “And we’re likely going to see skyrocketing prices if we did put a complete ban on oil.”
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