ROSS GREENWOOD:
Western nations' retaliatory actions against Russia for its invasion into Ukraine may have immediately pushed Moscow's stock market down more than 30 per cent, but otherwise the sanctions and impact seem, well, somehow anticipated by the Russians. Notwithstanding the tough talk where is the promised hurt?
Let's go to Treasurer Josh Frydenberg who joins me. Josh, can I just ask a question, does the West lack assertiveness to a certain extent ‑ does it mean it's now open slather for dictators to barge in and overthrow sovereign democracies wherever they want to?
JOSH FRYDENBERG:
No, it doesn't, and Russia's aggressive actions are a significant threat to the international rules‑based order that has underpinned prosperity for the last 70 plus years. This is the most significant inter‑state conflict in Europe since the Nazis were defeated. It's a very dangerous situation.
Nobody should tolerate Russia's aggressive actions, certainly liberal democracies like ours are going to stand alike with the Americans, the Canadian, the Japanese, Europeans, the British in putting in place very significant sanctions on Russian elites, on Russian entities and of course Russian banks.
We would support a move by the United States and others should they remove the access to SWIFT, which is the international payment system, for Russia. That would really isolate them from the international financial system. And we're looking at a whole range of other measures that could be implemented globally with our partners.
ROSS GREENWOOD:
But I get the sense that Putin would have war gamed this, they would have expected this response. But, you know, where is the genuine hurt that puts him back on his heels that makes his own people look at him and say, "Are you genuinely the leader that we want?"
JOSH FRYDENBERG:
Well this is just the start of the conflict and hopefully the start of the pain that the Russian government and Vladimir Putin starts to feel. I mean the stock market in Russia is down now by more than 40 per cent. The Russian currency has been depreciate waited by more than 10 per cent and the sanctions are just beginning to take hold. And there is a coalition of important, significant and large countries that are standing together against the Russian federation. So it is unacceptable aggressive behaviour by Vladimir Putin and there will be many countries that stand side‑by‑side against that aggression.
ROSS GREENWOOD:
Well just last weekend you were at the G20 Finance Ministers' summit in Indonesia. The Russian Finance Minister was there at that meeting. The Canadian Finance Minister Chrystia Freeland said, "The economic sanctions on Russia will be swift, they will be coordinated, they will be crushing. Like‑minded countries agree on this course of action and we are united and resolute". That's all very well but as I keep on saying, where was the hurt, where was the direct message to that Russian Finance Minister?
JOSH FRYDENBERG:
And that Russian Minister responded that it was all fake news about Russia's so‑called aggression against Ukraine. Well that fake news has turned into a very sad and painful reality for 43 million Ukrainians. Already hundreds of lives have been lost, thousands of people have been displaced and Russian forces are advancing on the capital.
We've also seen an impact across the global economy already. European gas prices are up by more than 50 per cent in the last week, Ross. Wheat prices, Ukraine's a major wheat market producer and are up by 16 per cent and the oil price has jumped by more than 6 per cent in the last week alone, and we had a barrel of oil go above $100 for the first time since 2014. So the impact on the global economy will be real. This represents a very significant head wind for the global economy just as we were recovering from the pandemic and the International Monetary Fund and others have talked about the repercussions for the global economy and particularly the growth forecasts that have been previously announced.
ROSS GREENWOOD:
So would you consider with Chrystia Freeland from Canada lobbying the G20 to expel Russia from the G20, just as it expelled from the G8 in 2014 when it overran Crimea, and of course then there was MH17 that affected Australia so deeply at that time. Is this something that you would consider?
JOSH FRYDENBERG:
Well I don't think you want to underestimate the level of concern among liberal democracies like Canada, Australia, the United States, the United Kingdom and others about Russia's actions. I’m sure there'll be many topics that are discussed about how Russia participates in future international groupings, because this is a shirt‑front to the international liberal rules‑based order.
This is actually putting in jeopardy what was achieved in the post‑Second World War global compact. First you had the United Nations formed in 1945, and as you know the year prior with the Bretton Woods Agreement in 1944, you had the International Monetary Fund and the World Bank established. Now in order to participate in those institutions Russia should be playing by those rules. But now they're not and their activity, their actions ‑‑
ROSS GREENWOOD:
So in other words so you would advocate ‑‑
JOSH FRYDENBERG:
‑‑ in recent days ‑‑
ROSS GREENWOOD:
So you would advocate Russia being excluded from some of these bodies because it is not playing by the rules of the other members, the G20 being first and foremost among them?
JOSH FRYDENBERG:
I think many countries will examine Russia's participation in these international forums from here on. I can't pre‑empt what would be the outcome of those discussions but there will be countries that question Russia's ability to participate in these international forums given what they have done in recent days to a country that posed no threat to themselves.
ROSS GREENWOOD:
Okay, so here's another idea for you. The Russian aluminium company Rusal owns 20 per cent of Queensland Alumina, its major shareholder traditionally has been Oleg Deripaska, you know, now that oligarch has already had US sanctions on him. It's still discovered in Europe that he still has control even though he's given up the control ostensibly to try and have the sanctions lifted. What say you to give some hurt to the Russians, literally take that 20 per cent on national interest grounds away from Russians, away from that oligarch?
JOSH FRYDENBERG:
Well as you know that's a partnership between that Russian company and Rio Tinto who are the major shareholder. I'm not going to talk about the specifics of individual cases because you would understand the reasons why, but it's fair enough to say that the Australian Government will be looking at further actions that it can take, particularly in concert with partners.
ROSS GREENWOOD:
Sure. But Deripaska here, right, this is from the US Senate Intelligence Committee, have found that he, including Rusal, are proxies for the Kremlin. They're here with a 20 per cent stake of Queensland Alumina in this country. If you want to hurt Russia a little bit, take that away from them. Take away the hurt so they don't have the influence in Australia.
JOSH FRYDENBERG:
Well again I'm not going to go into the specific cases or pre‑empt actions that may or may not be taken. What I can say though is we will be part of an international effort and there will be further actions that are taken. We've already put in place sanctions against individual elites from the Russian oligarchs. We've already taken actions with respect to Russian banks and other commercial entities, and we'll continue to work in concert with our friends and allies around the world.
ROSS GREENWOOD:
Treasurer Josh Frydenberg, always good to have a chat to you.
JOSH FRYDENBERG:
Thanks.