Saturday

27th May 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.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

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.

Nato head defends 'blunt' US leader

Nato chief Stoltenberg defended Trump’s behaviour at Thursday’s summit. The prime minister of Montenegro also apologised for him.

Trump lukewarm on Nato joint defence

Trump voiced half-hearted support for Nato and reprimanded allies over what he called unpaid debts on his maiden trip to Europe.

Trump lukewarm on Nato joint defence

Trump voiced half-hearted support for Nato and reprimanded allies over what he called unpaid debts on his maiden trip to Europe.

News in Brief

  1. Malloch will not be US ambassador to the EU
  2. 'Significant' drop in EU migration to UK
  3. Bomb injures former Greek PM
  4. British PM to speak out on US terrorism leaks
  5. Tusk calls for 'values, not just interests' after Trump meeting
  6. Pressure grows on climate impact of EU timber harvesting
  7. US goes after Fiat Chrysler over emissions cheat
  8. Munich police break up Europe-wide burglar clan

Stakeholders' Highlights

  1. UNICEFChild Alert on Myanmar: Fruits of Rapid Development yet to Reach Remote Regions
  2. Nordic Council of MinistersBecome an Explorer - 'Traces of Nordic' Seeking Storytellers Around the World
  3. Malta EU 2017Closer Cooperation and Reinforced Solidarity to Ensure Security of Gas Supply
  4. European Healthy Lifestyle AllianceHigh-Intensity Interval Training Is Therapeutic Option for Type 2 Diabetes
  5. Dialogue Platform"The West Must Help Turkey Return to a Democratic Path" a Call by Fethullah Gulen
  6. ILGA-EuropeRainbow Europe 2017 Is Live - Which Countries Are Leading on LGBTI Equality?
  7. Centre Maurits CoppietersWhen You Invest in a Refugee Woman You Help the Whole Community
  8. Eurogroup for AnimalsECJ Ruling: Member States Given No Say on Wildlife Protection In Trade
  9. European Heart NetworkCall for Urgent Adoption of EU-Wide Nutrient Profiles for Nutrition & Health Claims
  10. Counter BalanceInvestment Plan for Europe More Climate Friendly but European Parliament Shows Little Ambition
  11. Mission of China to the EUPresident Xi: China's Belt and Road Initiative Benefits People Around the World
  12. Malta EU 2017EU Strengthens Control of the Acquisition and Possession of Firearms