02 April 2014

[020414.EN.BIZ] Germany: Reciprocal Trade Sanctions Will hit Russia Harder Than West

GERMAN Finance Minister Wolfgang Schaeuble is warning Russia that it has more to lose in an all-out trade war with the European Union as the EU seeks to act against its seizure of the Ukraine's Crimea province.

Mr Schaeuble said the EU was united in its readiness to impose economic sanctions on Russia if the standoff over Ukraine escalates, stressing that Moscow has much more to lose than its western allies in rhetoric reminiscent of the Cold War era.

"I don't think we are divided. None of us wants to escalate, but if Russia changes things unilaterally, then it must know that we won't accept it and that relations will be bad," Mr Schaeuble said in an interview on German television, reported Reuters.

"Russia has a lot more to lose in the medium term than the West, than Europe or the United States," he said, adding that the aim was to uphold international law and it was "of secondary importance whether there is an economic or financial cost."

German companies are worried that sanctions could push up their energy prices if Russia decided to restrict oil and gas supplies, and deprive them of an important export market.

Germany's council of economic advisers said last week that the Ukraine crisis was the biggest threat to global growth, and especially Germany's, because of Russia's important role as an energy exporter.

Mr Schaeuble has said that if the European Union provides financial assistance to Ukraine, such assistance should not be squandered.

The government in Kiev and the donors would have to establish appropriate structures "so that the money goes where it is needed and does not end up in some obscure pot," said Mr Schaeuble.

Source : HKSG.

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