(Bloomberg) — Chieftains of German industry including the heads of Deutsche Bank AG, Mercedes-Benz AG and Siemens AG have met with Chancellor Olaf Scholz on Tuesday amid growing concern over fallout from sanctions targeting Russian energy supplies.
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While backing the sanctions introduced against Russia, the German industry heads outlined the challenges stemming from supply-chain disruptions and rising energy prices to Scholz, government spokesman Wolfgang Buechner said in a statement after the meeting.
The talks — held in person and via video conference — are the first major meeting between the top brass of Germany Inc. and the government since Russia invaded Ukraine in late February. Chemicals giant BASF SE and steelmaker Thyssenkrupp AG have warned of irreversible damage to Europe’s biggest economy should sanctions against Russia be extended to include imports of natural gas, a fuel companies heavily rely on to power their factories.
Corporate Germany’s business ties with Russia are currently collapsing “at the speed of light” because of the war, according to a senior manager from one of the country’s biggest companies, who spoke on the condition of anonymity.
Germany’s long-standing reluctance to stop buying Russian energy has put the country at odds with Ukraine, which accuses it of financing Vladimir Putin’s war machine, as well as its allies in Europe and the U.S. While the European Union last week banned coal imports from Russia in its first move targeting Moscow’s crucial energy revenue, Germany successfully lobbied to water down the measures to include a phased curbing of the imports over a few months. The EU is also exploring ways to limit Russia’s income from oil sales.
Scholz’s government has agreed on a financial-aid package for companies to dampen the effect of soaring energy costs that includes loan guarantees worth as much as 100 billion euros ($109 billion). German industry lobby BDI has warned that the program shouldn’t be hampered by strict access rules.
Emergency Plan
Last month, Germany triggered an emergency plan to brace for a potential Russian gas cut-off after Putin insisted that the fuel should be paid for in rubles. Since then, alleged atrocities in Ukraine have ratcheted up pressure to boycott energy supplies from Russia.
Germany relied on Russia for more than 50% of its natural gas last year, which declined to around 40% during the first quarter amid efforts to switch supplies.
Economy Minister Robert Habeck, who also is taking part in Tuesday’s meeting, has been driving efforts to fast-track construction of terminals to import liquefied natural gas with a plan to wean Germany off Russian gas imports over the next two years. The country aims to halt Russian coal imports by the fall and substitute most of its Russian oil imports with shipments from other suppliers by the end of this year.
(Updates with government statement in 2nd paragraph)
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