Washington and its allies in Europe and elsewhere have responded with fury to Moscow’s attack on Ukraine, sanctioning Russia’s financial system, aviation sector and other major parts of its economy in a thus-far fruitless effort to get President Vladimir Putin to back down.

“China has recently affirmed a special relationship with Russia. I fervently hope that China will make something positive of this relationship and help to end this war,” Yellen told the Atlantic Council.

Russian Foreign Minister Sergei Lavrov (Left) meeting his Chinese counterpart Wang Yi during his first visit to China since Moscow launched its invasion of Ukraine in February. Photo : AFP Credit: AFP

“The world’s attitude towards China and its willingness to embrace further economic integration may well be affected by China’s reaction to our call for resolute action on Russia.”

China as well as India are two major economies that have not taken part in the retaliatory measures, and Yellen said Beijing’s policy could have lasting implications for a country that is pursuing territorial disputes against its neighbors.

Janet Yellen
Janet Yellen. Photo: US Gov’t.

“China cannot expect the global community to respect its appeals to the principles of sovereignty and territorial integrity in the future if does not respect these principles now when it counts,” she said, in a reference to China’s claim over Taiwan.

‘On the fence’

Yellen also spoke to countries that “are currently sitting on the fence” when it comes to Moscow, “perhaps seeing an opportunity to gain by preserving their relationship with Russia and backfilling the void left by others.”

She warned that such policies “are short-sighted,” adding: “The future of our international order, both for peaceful security and economic prosperity, is at stake.”

“The unified coalition of sanctioning countries will not be indifferent to actions that undermine the sanctions we’ve put in place,” Yellen said.

With the World Bank and IMF set to begin their spring meetings next week, Yellen also called for reform to the two major economic institutions, saying the war in Ukraine proved the necessity of change.

“We will… need to modernize our existing institutions — the IMF and the multilateral development banks — so that they are fit for the 21st century, where challenges and risks are increasingly global,” she said.

“Some may say that now is not the right time to think big. Indeed, we are in the middle of Russia’s war in Ukraine,” Yellen said. “Yet, I see this as the right time to work to address the gaps in our international financial system that we are witnessing in real time.”

These measures should force the Kremlin “to choose between propping up its economy and funding the continuation of Putin’s brutal war,” she said.

She reflected on the massive economic collapse the Covid-19 pandemic caused in 2020, saying that while rich nations were able to spend to support their economies, efforts to help poor countries were less successful, causing “a divergence in global prospects.”

Yellen said the governance of the IMF should be considered “to ensure that it reflects both the current global economy and also members’ commitments to the (lender’s) underlying principles and objectives.”

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