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Financial Mirror (Cyprus) - - FRONT PAGE -

Dom­i­nant fig­ures on the right and left in Berlin have voiced dif­fer­ent views on how the EU should han­dle Rus­sia’s rou­ble cri­sis.

Wolf­gang Schaeu­ble, the fi­nance min­is­ter from the cen­treright CDU party in the grand coali­tion, showed lit­tle sym­pa­thy in an in­ter­view with the Rheinis­che Post daily on Christ­mas Eve.

“Of course, we are con­cerned about the de­vel­op­ments in Rus­sia … But that doesn’t mean we ac­cept that Rus­sia can im­pose its in­ter­ests by mil­i­tary means. The an­nex­a­tion of Crimea and Rus­sia’s per­ma­nent vi­o­la­tion of the cease­fire in Ukraine can­not re­main with­out con­se­quences. I hope ev­ery day that Rus­sia will re­turn to co-op­er­a­tion with the West, but un­til then we are stick­ing to the sanc­tions”, Schaeu­ble said.

But the cen­tre-left SPD’s for­eign min­is­ter, Frank-Wal­ter Stein­meier, speak­ing in Der Spiegel one day ear­lier, said a Rus­sian eco­nomic col­lapse is dan­ger­ous. Stein­meier noted the cur­rent sit­u­a­tion “can’t al­low us to go straight back to business as usual”.

But he added: “I’m wor­ried. This is why I op­pose any fur­ther tight­en­ing of the sanc­tions. Any­one who wants to bring the Rus­sian econ­omy to its knees is com­pletely mis­taken if they think that this will bring about greater se­cu­rity in Europe”.

Stein­meier said the EU and NATO should hold more talks with Rus­sia to al­le­vi­ate its trade con­cerns and to avoid an ac­ci­den­tal mil­i­tary con­fronta­tion. He also ruled out the idea of Ukraine join­ing NATO in the fore­see­able fu­ture.

Mean­while, Stan­dard & Poor’s warned on Christ­mas Day it might down­grade Rus­sian bonds to “junk” in Jan­uary.

Dmitry Polevoy, the ING Bank’s chief economist on Rus­sia, told Reuters that “near-term prospects for the rou­ble re­main highly un­cer­tain”. The cur­rency cri­sis has seen the price of ba­sic com­modi­ties, such as bread, rise steeply.

The main cause is a slump in oil prices. But EU sanc­tions on Rus­sian banks and en­ergy firms are mak­ing mat­ters worse by stop­ping the black­listed firms from buy­ing debt on in­ter­na­tional mar­kets. Three listed banks - Sber­bank, Vneshe­conom­bank, and VTB - have chal­lenged the mea­sures in the EU court in Lux­em­bourg on tech­ni­cal grounds.

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