In a significant address on August 3, 2023, Eric Van Nostrand, Acting Assistant Secretary for Economic Policy, hailed the success of the price cap policy in countering Russia's aggression in Ukraine and promoting global economic stability.
"Treasury, in close partnership with the rest of the U.S. Government and our foreign partners around the world, has implemented an unprecedented multilateral sanctions regime against the government of the Russian Federation," Van Nostrand said in a speech on August 3, 2023. "This effort has frozen half of Russia’s reserves, impaired the ability of its military industrial complex to field a modern army, and significantly cut into Russia’s oil revenues."
Van Nostrand discussed the success of the price cap policy and its role in countering Russia's aggression in Ukraine while promoting macroeconomic stability worldwide. The speech highlighted the significance of the United Kingdom's partnership in this endeavor and shed light on a "multifaceted approach" taken by the United States and its global coalition to support Ukraine and restrict Russian revenues.
The speech began by acknowledging the ongoing brutal war in Ukraine, driven by Russia's unwarranted invasion that has lasted for over a year and a half. Despite the challenges, the Ukrainian people's resilience and the support from the international community have remained steadfast.
"The Treasury Department, working alongside colleagues at USAID, has provided critical economic and budgetary assistance to Ukraine that has helped stabilize its economy and finances – bolstering the home front and supporting the war effort," Van Nostrand said. "We are grateful for the economic support that the UK, European Union, Japan, Canada, and the rest of our global coalition have also provided.:
The centerpiece of the speech was the innovative price cap policy on Russian oil. Implemented in collaboration with the Price Cap Coalition, which includes the U.K., G7 nations, the E.U., and Australia, this policy sought to restrict Russian oil revenues while maintaining stability in global energy markets.
Van Nostrand said that the price cap policy has been successful in achieving its dual goals. Russian federal government oil revenues for the first half of the year were nearly 50 percent lower than the previous year. The policy's impact on Russia's economy has led to public concerns and adjustments in their tax system.
According to Van Nostrand despite fluctuations in oil prices, the cap has continued to limit Russian revenues while providing stability in energy markets. This has been beneficial for lower-income countries dependent on discounted Russian oil and has contributed to a meaningful slowdown in global inflation.
Van Nostrand closed his statement by saying, "We come to this policy with humility and recognize these markets can change rapidly. We also know, like with all of our measures, Russia will attempt to evade the price cap. We remain vigilant in monitoring oil markets and the whole Coalition remains focused on enforcing our sanctions. Most importantly, we continue to dedicate our collective time, resources, and brainpower to achieving our ultimate goal of stopping the Russian war machine."