Export Controls

Companies Call for Government Help Over Confusing E.U. Sanctions Against Russia

The downing of a Malaysian Airlines plane in territory disputed by Russian-backed rebels prompted the sanctions. Source: DPA
The downing of a Malaysian Airlines plane in territory disputed by Russian-backed rebels prompted the sanctions. All 298 people on board were killed.
  • Why it matters

    Why it matters

    Confusion over EU export restrictions among German firms is so great that some engineering firms have stopped submitting bids to Russian clients.

  • Facts

    Facts

    • Many German companies, some with long-standing ties to Russia, are not sure which products fall under EU-imposed Russian economic sanctions.
    • Chambers of commerce and industry have seen a surge of inquiries from member companies.
    • Politicians are getting involved, especially in states with large numbers of companies affected by the sanctions, but so far the federal government has been reluctant to provide aid to businesses.
  • Audio

    Audio

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The European Union’s economic sanctions imposed against Russia last week are problematic for businesses. Many companies are preparing for substantial declines in revenues, while others are extremely anxious because they are not entirely certain whether their products fall under the export restrictions of the sanctions regime.

Local chambers of industry and commerce are receiving more inquiries, and there is great demand for advice, especially among the medium-sized companies that make up the backbone of the German economy, said officials with the Association of German Chambers of Industry and Commerce (DIHK). According to the German Engineering Association (VDMA), many companies are steering clear of business deals with Russia and have stopped submitting bids to Russian clients.

The prospect of impending losses has led to political involvement. States like Saxony and Saxony-Anhalt, where companies have traditionally maintained strong business ties with Russia, as well as the northern state of Lower Saxony, are calling for government assistance to businesses affected by sanctions against Russia. They want additional aid for companies and advocate a uniform, nationwide approach to the problem. Olaf Lies, a member of the center-left Social Democratic Party (SPD) and the economy minister in Lower Saxony, even proposed a special conference of state economy ministers.

The federal government doesn’t want to step into the breach. There are no plans to provide aid to affected companies.

But the federal government doesn’t want to step into the breach. There are no plans to provide aid to affected companies, nor are there “any other general thoughts” in this direction, a spokesman for the Federal Ministry of Economic Affairs said on Wednesday. The ministry cited the existing export credit guarantees known as Hermes cover, which would protect many exports to Russia in the event of non-payment by Russian companies. Ministry officials explained that they wanted to wait and see what the actual effects of the sanctions would be.

Aid for affected companies could alarm the European Commission. European rules pertaining to such aid must be observed, in light of the companies affected by the consequences of the sanctions, said a spokesman for the European Commission office in Berlin. He noted that the Commission would address the issue as soon as it becomes clearer how the sanctions will in fact affect E.U. companies.

The sanctions against Russia approved by the European Union last week include an arms embargo, a ban on exports of products with civilian and military uses to the Russian military and the suspension of shipments of specialized equipment for oil production.

Translated by Christopher Sultan

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