New sanctions against Russia could backfire and impact Germany’s own economy, Vice Chancellor Robert Habeck has warned.
“If Russia continues to escalate the conflict, the European Union will respond with tough economic sanctions in consultation with its partners. But the sanctions will also hit our own economy hard. But we are talking about European security, and this is also clear to our companies,” Habeck, who also serves as minister of economy and climate, said in an interview with Handelsblatt.
The vice chancellor indicated that German companies have been made to understand the risks. He warned that Germany may be on the verge of a war the likes of which has not been seen for decades, and the consequences of which could be unpredictable.
Russia and Germany are among one another’s largest trade partners, with Russia gas accounting for up to 40 percent of German consumption, and Germany providing the Russian side with a broad range of industrial goods and automobiles.
Russian-German trade grew by 34 percent in 2021, reaching the equivalent of nearly 60 billion euros, according to statistics published last week by the German Committee on Eastern European Economic Relations. Germany also enjoyed record trade with Ukraine in 2021, with total turnover toping 8.5 billion euros.
Committee chairman Oliver Hermes said that everyone benefits from “close business and export ties with our eastern European Union neighbours as well as important partner nations such as Russia, Ukraine and Kazakhstan.” He warned that it was “totally irresponsible” for “the fruits of this work” to be “again endangered by unresolved political conflicts.”
Germany has joined with allies in threatening to impose crushing new sanctions against Russia in the event of an escalation in Ukraine. Speaking at the Munich Security Conference on Friday, Foreign Minister Annalena Baerbock warned that Germany would be willing to “pay a high economic price” to “punish” Russia if it attacked its neighbour.
“That’s why all options are on the table for me, also Nord Stream 2,” Baerbock said.
Germany Ready to ‘Pay High Price’ if Russia Invades Ukraine, Including End to Nord Stream 2, FM Says
18 February 2022, 19:08 GMT
The foreign minister warned that the West was united and ready to use “unprecedented sanctions” pressure against Moscow. “We show solidarity because we are committed to the territorial integrity and sovereignty of Ukraine, and I’m being very clear here,” she said.
Baerbock when on to suggest that Berlin “doesn’t want” to threaten Russia with crushing financial, political and economic penalties, but would to prefer “to have a serious security dialogue on security and peace together in Europe” with Moscow.
Habeck and Baerbock are members of the Green Party – which joined the German Social Democratic Party and the Free Democrats in a coalition government following elections last year. While in opposition, the Greens consistently attacked Nord Stream 2, and called on the government of Chancellor Angela Merkel to import more gas supplies from the US and other countries instead. The Greens are also supportive of NATO’s eastward push, and opposed to closer economic cooperation between Europe and China.
The US and its European allies have spent months accusing Russia of preparing to “invade Ukraine” and threatening to impose apocalyptic sanctions ranging from restrictions on doing business with Russian banks to personal sanctions on individuals connected to the Russian government or state industries, to threats to cut Russia off from the SWIFT interbank transfer system and starve Moscow of technology and industrial imports. Russian officials have expressed readiness to address any potential sanctions pressure and the economic consequences restrictions cause.