The time for pseudo-Realpolitik and half-hearted measures against Vladimir Putin’s regime is up. The international community is finally waking up to this fact, with one notable, persistent exception: Germany. Even days after Russia launched an invasion against Ukraine by land, air, and sea, the German Federal Government stubbornly fights a losing battle of its own: to limit or soften Western sanctions against the aggressor.[i]
The environmental and human rights NGO Urgewald today calls on Germany’s Federal Government,utility companies, and financial institutions to finally and decisively cut ties with Vladimir Putin’s Russia. As the people of Ukraine are fighting for their independence and their survival, the whole post-WWII world order hangs in the balance, and we cannot afford clinging to business as usual. This approach already did its damage before the war. It not only stabilized Putin’s regime, it led into a protracted and delayed green transition in Germany and to continued environmental damage in the coal and gas production areas of Russia.
The Federal Government Fails the Fossil Test
Germany’s move to freeze the controversial gas pipeline Nord Stream 2 was a shamefully belabored decision, but it finally came on the eve of Putin’s invasion into Ukraine.[ii] Lest we forget, Nord Stream 1 is just as controversial and, 10+ years after its inauguration, keeps operating at full capacity even at this moment. Federal Ministers Christian Lindner (FDP)[iii] and Annalena Baerbock (Greens)[iv] each prominently stated that Germany depends on Russia’s gas and coal deliveries, and Western sanctions against the Russian aggressor must keep the energy market intact. Polish PM Mateusz Morawiecki appealed to German counterpart Olaf Scholz (SPD) to stop Nord Stream 1, currently to no avail.[v]
Germany should do better and put an embargo on all fossil fuel deliveries from Russia, effective immediately. Russia’s “limited and targeted” exclusion from the SWIFT system seems to eschew this crucial step;[vi] it is yet to be explained and put into practice.[vii] Like other hard measures, it came after prolonged debate and heightened pressure from international partners, bleeding out the momentum of the West’s response to Russian aggression.
“Anyone who lobbies for maintaining Russian energy supplies to the West must be in the clear: your money is funding the bullets, shells, and missiles that rain upon Ukraine today,” said Vladimir Slivyak, founder of EcoDefense and laureate of the Right Livelihood Award 2021. “The guns will not fall silent while fossil profits keep rolling in.”
German Energy Companies Keep Importing Russian Fossil Fuel
For years, German energy companies like RWE, Fortum’s German subsidiary Uniper, EnBW or Wintershall DEA have ignored the fact that their business relationships with Russia are strengthening Putin’s regime. Despite the annexation of Crimea and the East-Ukrainian territories in 2014 or the ongoing suppression of the Russian opposition and civil society organizations, the aforementioned companies never questioned their business ties to the Russian energy sector. Russia’s war against Ukraine has to be the turning point. European utilities must immediately stop the import of Russian gas, oil, and coal to turn off the money tap of the Putin regime and its aggressor army. Instead, companies like Uniper are buying up even more Russian gas since the beginning of the invasion to benefit from contractually negotiated fixed prices.[viii] In other instances, the companies plan to seek compensations from the public purse[ix]to offset any losses from their moral and financial gamble to do business with an unpredictable autocratic regime.
“Germany’s fossil fuel giant Wintershall DEA produces nearly 48% of its oil and gas in Russia. The utilities RWE, Fortum/Uniper, and EnBW import huge amounts of hard coal and gas from Russia. In doing so, they consistently ignore the fact that their business partners are a major source of income for the Putin regime and repeatedly engage in corrupt business practices. They have strengthened Putin and his regime with billions of Euros from fossil fuel sales. How can they explain continued business with Russia to the people of Ukraine who now fear for their lives? In the absence of an official embargo, German and European utilities have to act now. Otherwise, they can declare moral bankruptcy,” said Sebastian Rötters, Energy and Coal Campaigner at Urgewald.
German Banks Must Quit Russia
To invest billions in projects based in Vladimir Putin’s Russia is a morally and financially risky affair, but several German banks are happy to roll the dice. In September 2021, Germany’s Commerzbank was one of nine financial institutions that participated in an inaugural US dollar bond issue to the benefit of JSC SUEK, Russia’s biggest and dirtiest coal producer.[x] Not to be outdone, Deutsche Bank provided a US$781 million credit facility to Irkutsk Oil Company, a Russian LLC active in Siberia, as recently as 30 December 2021, weeks after Vladimir Putin had started amassing Russian troops along the Ukrainian border.[xi]
As part of the sanctions against the Russian aggressor, the Federal Government announced a stop to Hermes Cover for exports and investments in Russia.[xii] The decision begs the question: Why only now? In the eight years after the annexation of Crimea and the Russian separatist Donetsk People’s Republic and Luhansk People’s Republic, the Federal Government continued supporting German exports to Russia.
“Ending Hermes Cover for German exports to Russia is a good step, but it comes painfully late. Today, Putin feels at ease to act as he pleases because the reaction to his earlier breach of international law was very much business-as-usual,” said Regine Richter, Energy and Finance Campaigner at Urgewald. “37 Hermes guarantees were granted in the period 2015-2021 just for Russian oil and gas deals, contributing to Germany’s fossil fuel dependence on Russia. On top of halting exports to Russia, the Federal Government should also stop all energy imports from the country and direct resources into sustainable energy solutions.”
The time for limited measures and stepwise sanctions is up. Germany’s continued fossil fuel dependency still serves as a shameful excuse to resist a strong, decisive response to Putin’s aggression. Forceful sanctions will always hurt both sides. But that is not comparable with the pain of war. If we really mean to show solidarity with our European neighbor Ukraine, we cannot keep buying Russia’s energy resources, happily filling Putin’s war chest. Shame on us, if we look away and do not take a stand against Putin’s war in Europe by stopping all cashflow to Russia’s fossil fuel industry – now.
[i] https://www.ft.com/content/8b99b33b-92b0-42f4-ac02-ecbc9fae4c4c
[ii] https://www.reuters.com/business/energy/germanys-scholz-halts-nord-stream-2-certification-2022-02-22/
[iii] https://www.deutschlandfunk.de/finanzminister-lindner-verteidigt-vorlaeufigen-verzicht-auf-swift-ausschluss-russlands-100.html
[iv] https://www.faz.net/aktuell/politik/inland/baerbock-fuerchtet-energieengpass-bei-swift-ausschluss-17835752.html
[v] https://www.spiegel.de/politik/sanktionen-gegen-russland-polen-fordert-stopp-auch-von-nord-stream-1-a-863c51f9-f842-48ea-a283-74607a7e31f7
[vi] https://www.bundesregierung.de/breg-de/aktuelles/verbuendete-schliessen-russische-banken-aus-swift-aus-2008220
[vii] https://www.spiegel.de/wirtschaft/was-der-swift-ausschluss-russischer-banken-bedeutet-a-c18fa25f-2508-4e69-b4a4-16b5c0af1d61
[viii] https://www.handelsblatt.com/unternehmen/energie/ukraine-krieg-russland-liefert-seit-kriegsausbruch-mehr-gas-nach-europa/28105400.html?ticket=ST-2883367-gh4A1p3WV4vh31pIYv0I-ap2
[ix] https://www.ft.com/content/cb52943d-b79d-4a4b-86fe-2308e88df680
[x] https://www.urgewald.org/medien/commerzbank-partie-anleihe-russlands-groesstem-kohleunternehmen
[xi] https://www.reuters.com/world/europe/russia-says-ukraine-has-deployed-half-its-army-donbass-conflict-zone-2021-12-01/
[xii] https://www.tagesschau.de/wirtschaft/weltwirtschaft/hermes-buergschaften-russland-101.html
