Severe sanctions: Russia blocks airspace for British planes

While Europe is reacting to the attack on Ukraine with economic sanctions against Russia, Russia is countering with counter-sanctions.

The largest country in the world in terms of area has closed its airspace to British aircraft.

The Russian aviation authority announced on Friday in Moscow that machines leased in Great Britain were also affected by the overflight ban.

This is in response to a landing ban on Russian state airline Aeroflot imposed by Britain after the Russian invasion of Ukraine.

The authority referred to an agreement between the two countries "that the airlines of both countries receive fair and equal rights".

Russia has announced retaliation for sanctions imposed by the West.

Moscow will respond with "symmetrical and asymmetrical" countermeasures, Kremlin spokesman Dmitry Peskov said on Friday.

The EU, the United States and other western allies had imposed extensive sanctions on Moscow because of the Russian invasion of Ukraine.

The federal government has stopped the guarantees for exports to Russia and investments in Russia, which are important for German companies.

"The approval of Hermes guarantees and investment guarantees for Russia has been suspended until further notice," said a spokeswoman for the Ministry of Economic Affairs on Friday.

This is not part of the actual EU sanctions against Russia but was decided by Germany in the interministerial committee.

Hermes no longer guarantees business in Russia

With export guarantees, the so-called Hermes guarantees, exports by German companies are secured, especially to countries where there is an increased risk of non-payment.

This is intended to help SMEs in particular with exports.

The same applies to direct investments in countries in which the risk is cushioned by investment guarantees.

The companies have to bear a fee for sureties and guarantees as well as part of the risk of up to 15 percent themselves.

Almost half of the original 6,300 companies with German capital have withdrawn from the Russian market since 2011.

According to the Chamber of Commerce Abroad (AHK), around 3,650 German companies are still active on site.

The companies employed more than 277,000 people in 2019.

Last year goods worth almost 27 billion euros were shipped to Russia.

Machinery (EUR 5.8 billion), motor vehicles and motor vehicle parts (EUR 4.4 billion) and chemical products (EUR 3.0 billion) were particularly in demand.

According to the Ministry of Economic Affairs, 1.49 billion euros of exports were secured in 2021 via new Hermes guarantees.

Due to the trend towards localization, German direct investments in Russia have increased in recent years.

They amounted to around 25 billion euros.

In 2021 there were new state guarantees of only 3.75 million euros.

German companies are among the most active foreign investors in Russia.

In addition to the high need for modernization and the good image of the "Made in Germany" brand, the comparatively high profit margins are particularly attractive, according to the Association of German Chambers of Industry and Commerce (DIHK).

The extended internal market of the Eurasian Economic Union (EAEU) with 180 million consumers is also one of the plus points.

Can the West keep up with the sanctions?

So far there has been disagreement in the West with regard to the question of whether Russia can be excluded from the important international payment system SWIFT.

According to federal government spokesman Steffen Hebestreit, it is not only Germany that has concerns about Russia's exclusion from the Swift international payment system, Italy and France have also raised objections.

This measure would require longer preparation and would also have noticeable effects in Europe.

A number of EU countries also do not want sanctions for gas and oil supplies from Russia.

According to government spokesman Hebestreit, the reason is that the energy supplies from Russia cannot be replaced immediately.

However, sanctions should be designed in such a way that they are also "sustainable". He would be happy if Switzerland would join the EU sanctions. A spokeswoman for the Ministry of Economic Affairs explains that alternatives for coal imports from Russia are being examined.