Energy Deal With Russians Puts Some In Germany On Edge

The German government has intervened in a trade deal between a German arms manufacturer and the Russian military.

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DAVID GREENE, HOST:

NPR'S business news begins with German intervention.

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GREENE: The German chancellor, Angela Merkel, has been pushing for European sanctions against Russia, in retaliation for the takeover of Crimea. The German government recently blocked the sale of arms by a local manufacturer to the Russian military.

GREENE: But as Esme Nicholson reports from Berlin, the government is not interfering in the sale of an oil and gas company to Russia.

ESME NICHOLSON, BYLINE: Last year, the German energy giant RWE suffered its first loss of revenue since 1949. Now, it plans to sell its oil and gas subsidiary - the profitable arm of the business - to an investment group owned by Russia's second-richest man, Mikhail Fridman.

German parliamentarians - including members of Merkel's own party - are worried the $7.1 billion deal will compromise Germany's sovereignty and political power in the current climate.

JEEVAN VASAGAR: Clearly, it's problematic that Germany is sending out a signal that it's still open for business, and still willing to do deals with the Russians.

NICHOLSON: Jeevan Vasagar is the Berlin correspondent for the Financial Times.

VASAGAR: There isn't a direct threat to Germany's national security from doing this deal. The government's powers to intervene in the RWE case are very limited.

NICHOLSON: Earlier this week, the economy ministry did stop the delivery of a combat simulation center to the Russian army, stating that the export of defense equipment was unacceptable in the current circumstances.

The same ministry told NPR that it has no intention of suspending planned energy deals between Germany and Russia, drawing a distinction between trade that increases Russia's military strength and what they see as straight-forward commercial transactions.

The energy firm Wintershall is about to sell 20 percent of its domestic gas-storage facilities to Gazprom, another deal that has unnerved lawmakers.

On Thursday, Angela Merkel sought to reassure the German parliament that energy security is high on her agenda.

CHANCELLOR ANGELA MERKEL: (German spoken)

NICHOLSON: Merkel said more must be done to diversify Germany's energy sources and energy trade routes. There's been talk of Germany looking to North Africa to reduce its dependency on Russian gas, but it could be a futile move.

Jeevan Vasagar says RWE has lots of licenses in North Africa. The deal puts a potential part of Germany's future energy supplies back into the hands of Russian business men.

For NPR News, I'm Esme Nicholson in Berlin.

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