G7 willing to step up sanctions on Russia over Ukraine

Updated: 2014-06-05 10:31

(Agencies)

Economics and trade

US President Barack Obama (C) is welcomed by European Council President Herman Van Rompuy (R) and European Commission President Jose Manuel Barroso as they shake hands at the European Council headquarters ahead of a G7 meeting in Brussels June 4, 2014. The world's leading industrialized nations meet without Russia for the first time in 17 years on Wednesday, leaving President Vladimir Putin out of the talks in retaliation for his seizure of Crimea and Russia's part in destabilizing eastern Ukraine. [Photo/Agencies]

As well as foreign policy, the two-day G7 summit will cover economics, trade, climate and energy policy.

One of the most sensitive discussions will be over energy security, particularly in Europe, which relies on Russia for around a third of its oil and gas - a fact that gives Moscow leverage over the EU and its 500 million people.

European leaders have committed themselves to diversifying away from Russia but doing so will take time and be costly, and may in part depend on the willingness of the United States to supply liquified natural gas to Europe.

A separate communique will be released by the G7 leaders after talks on Thursday which will highlight the need to prioritise security of energy supplies.

"The use of energy supplies as a means of political coercion or as a threat to security is unacceptable," a draft of that statement, seen be Reuters, said.

"The crisis in Ukraine makes plain that energy security must be at the centre of our collective agenda and requires a step-change to our approach to diversifying energy supplies."

The economic discussion is not expected to break new ground, instead reiterating that all the G7 members - the United States, Canada, Germany, France, Britain, Japan and Italy - must focus on sustaining economic recovery and tightening regulations to prevent future banking sector problems.

The leaders will reaffirm a commitment to completing financial reforms this year including ending "too-big-to-fail" banking.