U.S. Signals Potential Sanctions Relief for Russia Amid Ukraine War Talks

Russia could ease up some of the U.S. sanctions, according to the interview given by Scott Bessent, U.S. Treasury Secretary, to Bloomberg on Thursday, during which he stated that the U.S. is ready to negotiate over the ongoing Ukraine war.

Bessent also said he will be having a conversation with his Chinese counterpart on Friday and will ask China to center its economy around more consumer spending.

When was asked if the U.S. is willing to impose greater sanctions on Russia or reduce them depending on how negotiations cease regarding the Ukraine war, Bessent candidly stated, “That’d be a very good characterization.”

In addition, he said, "The president is committed to resolving this matter as fast as possible."

According to President Donald Trump, he intends to meet Russian President Vladimir Putin at some point during this month in order to discuss terms and conditions to end the war.

Bessent in the interview stated that he will not be able to provide a specific date for a Trump-Putin meeting but confirmed that he will not be attending G20’s next week's finance ministers or central bank governors meetings in South Africa “because of some personal reasons.”

When carrying out his confirmation hearing during the U.S. Senate, Bessent “promised” he would increase the sanctions on Russia's energy and oil sector if requested by Trump.

The Treasury chief is trying to beat Zelenskiy for refusing to seal a mineral supply contract worth five hundred billion dollars and for intensifying the verbal battle with Trump. The American president has directed Zelenskiy is a “dictator.” Bessent said that Zelenskiy, “assured me that he would sign the minerals deal in Munich and he has not.” He referred to the supply arrangement for minerals as part of the ‘elegant plan’ strategy to nudge Ukraine closer into the sphere of influence of the US. On Wednesday, Zelenskiy turned down the U.S. offers which asked Ukraine to compensate the US that amount in mineral riches in exchange for wartime aid, claiming that the United States has given nowhere near that amount and provided zero specific guarantees in the deal. 

CHINA REBALANCING ARGUMENT 

Bessent said he would recommend economic reforms which would promote greater domestic consumption during the “introductory” call with his Chinese counterpart. He was silent on the person who he would talk to. His predecessor, Janet Yellen, used to have regular phone conversations and meetings with Chinese Vice Premier He Lifeng.

Both Yellen along with several other U.S. Treasury secretaries over the years including her have been arguing that China should rely less on exports for its growth. However, China has not shifted from its investment and export led growth strategy.

“Chinese need to consume more, they are indeed supressing the potential consumer in favour of the business,” Bessent said.

“DEBT ISSUANCE UNCHANGED”

According to Bessent, the steps towards increasing the proportion of long term Treasuries in government debt servicing are still rather long, especially taking into account the Fed’s current quantitative tightening policy.

Bessent noted that during Trump’s election campaign, his focus was directed towards Yellen and her inability to tackle the high reliance on shortening bills, which tend to have lower interest payments attached to them. In Bessent’s opinion, this was meant to increase economic activity but such a diagnosis was rejected by Yellen.

Bessent’s Reply  “It’s going to be path dependent,” he said when discussing if the market will be ready to adjust to the long forms.

The report further stated that he has dismissed the suggestion that the US government would consider altering the value of gold it holds to lessen the debt burden or to finance a sovereignwealth fund.

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