Thursday

29th Sep 2022

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.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

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.

Column

EU should admonish less, and listen more, to the Global South

Whether on Russia, or gas, or climate change, or food security, the EU's constant finger-wagging and moralising is becoming unbearably repetitive and self-defeating. Most countries in the Global South view it as eurocentric and neo-colonial.

News in Brief

  1. EU to ban Russian products worth €7bn a year more
  2. Denmark: CIA did not warn of Nord Stream attack
  3. Drone sightings in the North Sea 'occurred over months'
  4. Gazprom threatens to cut gas deliveries to Europe via Ukraine
  5. New compromise over EU energy emergency measures
  6. 15 states push for EU-wide gas price cap
  7. EU: Nord Stream explosions 'result of a deliberate act'
  8. EU okays €21bn Covid-recovery funding for Italy amid concern

Stakeholders' Highlights

  1. The European Association for Storage of EnergyRegister for the Energy Storage Global Conference, held in Brussels on 11-13 Oct.
  2. EFBWW – EFBH – FETBBA lot more needs to be done to better protect construction workers from asbestos
  3. European Committee of the RegionsThe 20th edition of EURegionsWeek is ready to take off. Save your spot in Brussels.
  4. UNESDA - Soft Drinks EuropeCall for EU action – SMEs in the beverage industry call for fairer access to recycled material
  5. Nordic Council of MinistersNordic prime ministers: “We will deepen co-operation on defence”
  6. EFBWW – EFBH – FETBBConstruction workers can check wages and working conditions in 36 countries

Latest News

  1. The European shipping giants plying Putin's fossil-fuels trade
  2. Russian ideologue and caviar on latest EU blacklist
  3. Netherlands tops EU social safety net for the poor
  4. New EU rules to make companies liable for their AI failures
  5. Can King Charles III reset the broken Brexit relationship?
  6. Meloni's navy-blockade plan to stop Libya migrants 'unlikely'
  7. Underwater explosions were detected near Nord Stream leaks
  8. EU countries stall new pesticide rules, blame Ukraine war

Join EUobserver

Support quality EU news

Join us