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German Taxpayers Foot the Bill for Anti-Russia Sanctions

Rheinmetall AG has had to cancel an already approved deal with Russia due to sanctions. Now the company wants compensation from the government. Guess who will pay? 

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This article originally appeared at German Economic News. Translated for RI by Anita Zalaldinova

Rheinmetall Ag asks for 120 million euros of compensation from the German taxpayers because the Federal government extended sanctions against Russia and Rheinmetall has had to cancel an already approved deal with Russia.

<figcaption>Rheinmetall AG wants 120 million in compensation. </figcaption>
Rheinmetall AG wants 120 million in compensation.

According to media Rheinmetall AG demands 120 million euros of compensation from the Federal governmentfor a banned by Economy minister Sigmar Gabriel arms deal with Russia. Süddeutsche Zeitung reports that Rheinmetall submitted a respective request to the Federal Office of Economics and Export Control (BAFA), situated in the Hessian city of Eschborn, which is associated with the Ministry of Economy. The Ministry therefore acknowledged receipt of the request by BAFA and said: ‘This application will be examined’. Author Klaus Ott writes that the request of the Rheinmetall is only one of that kind. Other companies have not lodged a complaint yet.

In 2011 Rheinmetall agreed with Russia to supply and install a combat training centre, and the deal was approved by the German authorities. After the annexation of Crimea by Russia and the beginning of the war in Ukraine Gabriel revoked the export license; the deal of the total value of 135 million euros was cancelled. Rheinmetall does not claim 15 million euro considering that none of the services for that part of the deal have been performed.

The reason for withdrawal was the EU sanctions against Russia. But Germany broadened sanctions, since the sanctions of the EU, which include a moratorium on arms sales, had not included already agreed transactions.

Rheinmetall stated that they were in contact with the Ministry of economy in order to ‘avoid and minimize’ the damage in the interests of the shareholders of the company. The company already made the investments.

Rheinmetall is advised by the former Development aid minister Dirk Niebel to ‘support development of global government relations’.

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