Thursday

27th Jul 2017

German central bank: Russia has more to lose than we do

  • The German central bank (Photo: Bundesbank)

German central bank chief Jens Weidmann said on Tuesday (25 March) that Russia has more to lose than Europe if economic sanctions are imposed over its actions in Ukraine.

"The escalation of the conflict has resulted in massive capital outflows, to a significant fall in value of the Russian ruble and to a rise in financing costs," Weidmann told foreign journalists in Berlin.

Thank you for reading EUobserver!

Subscribe now and get 40% off for an annual subscription. Sale ends soon.

  1. €90 per year. Use discount code EUOBS40%
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

He downplayed the impact of possible economic sanctions, noting that "even in case of a serious downturn of the Russian economy, there will be only a limited impact on the economic performance of the eurozone and of Germany."

Weidmann noted that the exposure of eurozone banks to Russian customers is of €77 billion, or two percent of their overall lending operations, with Russia having "about the same importance as Poland or Turkey."

According to calculations made by Bruegel, a Brussels-based think tank, the cost of replacing Russia's total gas exports to EU's 28 member states would take €36.5 billion out of the Russian economy, equivalent to 2.2 percent of its GDP. For the EU, the cost of replacing Russian gas supplies with Norwegian, North African, Dutch and more LNG imports would amount to €10.8 billion, or 0.08 percent of the EU GDP.

Meanwhile, speaking in the Hague the same day, US president Barack Obama admitted that "some particular sanctions would hurt some countries more than others."

“But all of us recognise that we have to stand up for a core principle that lies at the heart of the international order,” he added.

Obama also painted Russia as less important than it thinks it is.

"Russia is a regional power that is threatening some of its immediate neighbours not out of strength but out of weakness," Obama said.

"They don’t pose the number one national security threat to the United States."

Also in the Hague, German Chancellor Angela Merkel warned of the consequences of Russia's actions at a time when other countries are considering to give up their nuclear weapons.

She pointed to a 1994 memorandum signed by Russia, the US and the UK guaranteeing Ukraine's territorial integrity in return for Ukraine giving up its nuclear arsenal, at the time, the third largest in the world.

"The fact that Russia has violated this territorial integrity to such extent is for sure a very bad example on international stage. I hope it sets no precedent. But the danger is there," Merkel said.

Russia's stock markets have fallen by 4.5 percent since the news of EU and US sanctions.

But Russian President Vladimir Putin has ridiculed the move, saying he will open up an account at Rossyia Bank, which was put on the US sanctions list.

In retaliation to Visa and Mastercard refusing to do business with cardholders of Rossyia Bank, a bill was introduced in the Russian parliament banning transaction services based outside Russia. This means that Visa and Mastercard will no longer be able to service any customers in Putin's domain.

Journalists on trial highlight Turkey crackdown

The trial, which opened Monday, of 17 journalists and administrative employees of the daily newspaper Cumhuriyet is considered one of the most important episodes in a systematic campaign to silence dissent.

Opinion

Stronger EU-Egypt ties must not disregard human rights

The EU’s apparent willingness to water down its stance on human rights in Egypt could seriously compromise its credibility and have far-reaching consequences for its relations with other countries in the region.

Stakeholders' Highlights

  1. EU2017EELocal Leaders Push for Local and Regional Targets to Address Climate Change
  2. European Healthy Lifestyle AllianceMore Women Than Men Have Died From Heart Disease in Past 30 Years
  3. European Jewish CongressJean-Marie Le Pen Faces Trial for Oven Comments About Jewish Singer
  4. ACCAAnnounces Belt & Road Research at Shanghai Conference
  5. ECPAFood waste in the field can double without crop protection. #WithOrWithout #pesticides
  6. EU2017EEEstonia Allocates €1 Million to Alleviate Migratory Pressure From Libya in Italy
  7. Dialogue PlatformFethullah Gulen's Message on the Anniversary of the Coup Attempt in Turkey
  8. Martens CentreWeeding out Fake News: An Approach to Social Media Regulation
  9. European Jewish CongressEJC Concerned by Normalisation of Antisemitic Tropes in Hungary
  10. Counter BalanceOut for Summer Episode 1: How the EIB Sweeps a Development Fiasco Under the Rug
  11. CESICESI to Participate in Sectoral Social Dialogue Committee on Postal Services
  12. ILGA-EuropeMalta Keeps on Rocking: Marriage Equality on Its Way

Latest News

  1. EU defends airline data-sharing after court ruling
  2. Stop blaming Trump for Poland’s democratic crisis
  3. EU and US scrap on Russia sanctions gets worse
  4. Czechs, Hungarians, and Poles have one month to start taking migrants
  5. EU Commission sets red lines for Poland on Article 7
  6. Court told to 'dismiss' case against EU migrant quotas
  7. Russia's EU pipeline at 'risk' after US vote
  8. EU Commission to act on Poland