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Trade

Germany cancels major arms deal with Russia: report

Germany has walked away from a major arms deal with Russia because of the ongoing Ukraine crisis, a prominent German newspaper reports. The deal was already in question following the annexation of Crimea.

The daily Süddeutsche Zeitung newspaper reported on Monday that the German government had canceled a deal to provide Russian forces with a fully-equipped combat training camp.

The newspaper said the Economy ministry revoked permission for the camp to be built, granted by Germany's previous coalition government to Dusseldorf-based defense company Rheinmetall. It claimed to have seen a "written document" that includes the decision to scrap the project, worth some 100 million euros ($134 million).

Vice Chancellor and Economic Affairs Minister Sigmar Gabriel already put the deal on hold in March in response to Russia's annexation of Crimea. At the time, the federal government described such a potential export as unacceptable "in the current situation."

Russia, though, accused Germany of acting under pressure from the United States and called March's decision "unconstructive."

German media says the military training camp would train up to 30,000 soldiers per year, using sophisticated simulation tools.

The report comes almost a week after the US and EU imposed broad sanctions on Russia - targeting its energy, defense and finance industries - in hopes the harsher measures would force Moscow to reduce its support for rebels fighting in eastern Ukraine.

The EU's sanctions include an arms embargo, a ban on exports of some sensitive technologies and a ban on the sale of bonds and equities by state-owned Russian banks in European capital markets.

US President Barack Obama told reporters last week that Washington would block exports of specific goods and technologies to the Russian energy sector, while expanding sanctions to include more Russian banks and defense companies. The US also suspended credit that encourages exports to Russia, and financing for economic development projects in Russia.

jr/av (AFP, dpa)

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