Russia Sanctions: German economy faces wave of bankruptcies — banking chief

German industrial production dropped beyond expectations

Aggressive sanctions against Russia are sending financial shockwaves through Germany

Germany will be battered with a wave of bankruptcies due to Ukraine-related sanctions against Russia, according to Commerzbank Chief Executive Officer Manfred Knof.

“The energy supply in Germany is at risk, supply chains are breaking down, we have high inflation,” Knof was quoted by the Handelsblatt daily as saying.

According to the executive, almost a third of Germany’s foreign trade has been impacted, forcing companies to navigate complex issues with customers, including surging commodity prices and supply-chain bottlenecks.

“We shouldn’t delude ourselves: the number of insolvencies in our markets will probably increase and the risk provisions of the banks with it,” Knof said.

On Friday, top EU diplomat Josep Borrell said the bloc’s foreign ministers will meet next week should member states fail to reach an agreement by the weekend on banning Russian oil.

Brussels unveiled plans for a Russian oil embargo earlier this week. The measure is expected to come into force within nine months, with the timeframe varying for different petroleum products.

Several EU nations including Hungary, Slovakia and the Czech Republic are seeking an exemption from the ban.

Already for Germany which is the largest Europe's economy, industrial production dropped more than expected in March, data released on Friday by the country’s statistics office shows. According to Destatis, Covid-related supply chain issues have been exacerbated by the conflict in Ukraine.

Production slid by 3.9% last month following a 0.1% increase in February, far outstripping expectations of a one-percent decline. On an annual basis, industrial output slumped by 3.5% in March following a 3.1% jump the month before.

Manufacturing production lost 4.6% in March and energy production was down 11.4%, while construction output gained 1.1%, according to the data. On Thursday, it was reported that manufacturing orders logged a 4.7% month-on-month decline in March.


The largest drop was recorded for capital goods, used by businesses in production, which tumbled by 8.3%.

“In these politically and economically difficult times, the decrease also shows a growing reluctance to invest,” the statistics office said in a statement.

Foreign orders from outside the eurozone nosedived 13.2% in March, while demand from inside the area strengthened by 5.6%. Domestic orders edged down by 1.8%.

“Many enterprises still have problems completing their orders because of interruptions in supply chains, which is due to continuing Covid-19 crisis restrictions and the war in Ukraine,” Destatis said.

#Mideast: United States Warns China Against Buying Iranian Crude Oil

The United States of America has again warned China that it will not turn a blind eye to rising Iranian oil exports to Chinese ports, the Financial Times reported

The report, citing a senior Biden administration official says Washington has not missed the substantial increase in Iranian crude shipments to China. 

U.S reminded Beijing that there are still sanctions in place against the Islamic republic of Iran. “We’ve told the Chinese that we will continue to enforce our sanctions,” the unnamed official told the FT. “There will be no tacit green light.”

Yet the Trump-era sanctions may be waived if Iran and the U.S. make it to the negotiation table. “Ultimately, our goal is not to enforce the sanctions; it is to get to the point where we lift sanctions and Iran reverses its nuclear steps,” the official told the FT.

The Asia leader and the second largest economy has been ramping up shipments of crude from Iran  from an average of 306,000 bpd last year. 

This month, China has been taking in some 856,000 bpd of Iranian crude—a 129-percent rise over February. The China’s interest in Iranian oil has been based on a comprehensive strategic partnership between the two countries. The initiative expects trade between the two countries to reach $600 billion over the next decade. 

In addition, China’s Belt and Road initiative (BRI) attempts to strengthen regional political, economic, and strategic ties, with a focus on the energy industry. But Iranian oil is also attractive for a very simple reason: Iran is selling it at a deep discount because of the sanctions. 

According to oilprice.com The low price makes Iranian crude attractive for other Asian buyers too, such as India, which has been on the hunt for alternatives to Middle Eastern OPEC oil because of its high price.

As regarding the President Donald Trump Era sanctions that are still in effective which Iran tagged economic terrorism against the Islamic Republic, Tehran has insisted that the Wasington first lift sanctions before negotiations on the nuclear deal start while the U.S. wants negotiations first, sanction-lifting later.

Economic Terrorism, Genocidal Taunts Won't 'End Iran' - FM Zarif Reply Trump

Russian FM Lavrov Says Moscow Will Respond in Kind to Sanctions Against Russia Over Navalny Case

 

Russian Foreign Minister Sergei Lavrov has said Moscow will respond in kind to the EU sanctiona against Russia over Russian opposition figure Alexei Navalny poisioning case.

Lavrov had earlier on Tuesday said that the European Union had adopted the US style of threatening and punishing states with sanctions. "People who are responsible for the Western foreign policy and do not understand the need for mutually respectful dialogue, we probably have to suspend dialogue with them for a while. Especially since [President of the European Commission] Ursula von der Leyen is saying that the geopolitical cooperation with the current Russian authorities is not working. So let it be if that's what they want," Lavrov said at a session of the Valday discussion club.

The Russian FM's statement comes a day after foreign ministers of the European Union reached an agreement to impose sanctions on Russia over the alleged poisoning of Navalny, citing a violation of the International Chemical Weapons Convention.

Commenting on the decision, the Russian foreign minister said that the European Union had adopted the US style of threatening and punishing states with sanctions.

"The European Union is actively pursuing the path of the United States relying more and more on threats and sanctions. Two mechanisms have been established to punish those who use chemical weapons according to the EU and those who violate human rights, again, according to the EU," Lavrov said during a presentation of Valdai International Discussion Club's report, dubbed "The Utopia of a Diverse World: How History Continues."

According to the top Russian diplomat, such mechanisms violate the principles of the UN Charter and are outside the framework of the UN Security Council.

Russia has demanded that Germany provide evidence on the Navalny case and make the case materials available to Russian investigators. The Organisation for the Prohibition of Chemical Weapons (OPCW) issued a report last week stating that traces of a toxin not in the OPCW's registry of prohibited chemicals had been found in Navalny's system.

In a recent interview with the German Spiegel news magazine, Navalny accused Russian President Vladimir Putin of being behind his alleged poisoning. The Kremlin called his statement "extremely insulting and unacceptable."