Bloomberg: Germany, others seek exemptions in possible sanctions on Russia

Germany and possibly other European countries want exemptions for the energy sector in any sanctions targeting Russia if it further invades Ukraine, Bloomberg reported, citing documents and unnamed sources.

The report reveals continued disagreement among Western allies about how to punish Russia, which has 120,000 well-equipped troops on Ukraine's borders.

Each is doing its best to protect its own economy from side effects, especially in the form of a cut in the already scarce gas supplies this winter.

On Jan. 19, U.S. President Joe Biden alluded to this disagreement, saying it might be hard to be on the same page with allies about sanctions if Russia’s incursion is limited. The White House quickly clarified that it would consider any further crossing of the border by Russian forces to be a major invasion.

Soon after, European allies scrambled to make individual proclamations of unity on Russian sanctions.

However, Bloomberg’s report is consistent with what is already known about Germany’s hesitant attitude towards major sanctions towards Russia and its fear of blowback for its economy.

The exemptions Germany wants do not necessarily include Nord Stream 2, the Baltic Sea gas pipeline from Russia to Germany that’s awaiting authorization to become Russia’s main pipeline to Europe.

The documents seen by Bloomberg have been shared with Berlin's allies and are likely to make it into the final sanctions package, according to one unnamed official.

Stefan Meister, a program head at the German Council on Foreign Relations, said that internal debate continues to rage within Germany as other countries accuse it of enabling Russia.

"There is chaos with internal communication within the parties and the ministry," Meister said. The Social Democratic Chancellor Olaf Scholz is "not leading," while the Green party is "not strong enough to push things through."

"It's not clear who leads Germany at the moment," he said, adding that the government's intention was to keep things ambivalent.

Germany is the only country in Europe with a clear list of what it wants and doesn't want in the sanctions package, Meister added. Still, there are numerous other countries that have kept quiet because they also have problems with deeper sanctions, content that Germany is getting the lion's share of the negative attention.

Other European countries are seeking carve-outs from the sanctions, pushing for “transition periods before the full force of the measures would take effect, as well as protections for existing contracts,” according to Bloomberg.

Bloomberg didn't name those countries.

Berlin and perhaps other capitals also have reservations about the potential to disconnect major Russian banks from the SWIFT international transaction system, as well as freezing major Russian assets.

Italy and Austria are known to be reluctant, said Gustav Gressel, a senior policy fellow at the European Council on Foreign Relations’ Berlin office.

Helmut Brandstätter, an Austrian lawmaker and Ukraine supporter, said in an interview with the Kyiv Independent that while Austrian officials and politicians have come out in favor of sanctions on Russia should it deepen its invasion, they've been reluctant to go into any specifics.

Many in the Austrian government, including Foreign Minister Alexander Schallenberg, have come out against shutting down Nord Stream 2. Austria's integrated oil and gas firm, OMV, is a financing partner on the project. The Austrian state is a substantial minority shareholder in OMV.

Brandstätter has spoken in parliament in favor of strong sanctions that include Nord Stream 2, saying that it was important to make sure that one country is not allowed to invade another in Europe.

Meanwhile, top executives at some of Italy's largest companies had a Zoom call with Russian President Vladimir Putin on Jan. 26 to discuss economic ties.