Berlin: Europe’s largest economy Germany can expect a “big impact” from the repercussions of Western sanctions against Russia for its invasion of Ukraine, Economy Minister Robert Habeck said on Thursday.
The fallout from the war is likely to derail Germany’s hoped-for economic rebound in the second quarter of 2022 from the easing of the coronavirus fight, Habeck told reporters.
“The impact of the sanctions and the war on all sectors of the economy is so strong that one can fear a significant impact,” he said.
But despite the “difficult economic climate”, Habeck praised the companies for backing the sanctions and backing the international response against Moscow’s aggression.
The United States and its European allies have imposed sweeping sanctions aimed at isolating Russia from the global financial and trading system, including punitive measures targeting corporations, banks and billionaires.
As a result, German car giants Volkswagen, Daimler and BMW have announced they are suspending operations in Russia, while factories in other countries sit idle as fighting in Ukraine disrupts supply chains.
“We have to be grateful that every company I’ve spoken to, in the United States and here, fully supports the sanctions, even though it’s a huge burden on them, even though employees are affected and the situation is tense,” said Habeck.
Export power Germany has traditionally had close trade ties with Russia, and Habeck said Berlin would help shield affected businesses from the fallout.
“German companies have invested around 20 billion euros in Russia,” he said, of which only around 7.4 billion euros were covered by insurance.
The German government would make cheap credit available through its public lender KfW to help offset some of the losses, he added.