Germany resists EU ban on Russian gas as bloc prepares new sanctions

BERLIN/BRUSSELS (Reuters) -German Finance Minister Christian Lindner on Monday rejected a European Union embargo on Russian gas imports as mounting civilian deaths in Ukraine increase pressure on the bloc to impose sanctions on Russia’s energy sector.

“We are dealing with a criminal war,” Lindner said before talks with his EU colleagues in Brussels. “It is clear we must end as quickly as possible all economic ties to Russia. We must plan tough sanctions, but gas cannot be substituted in the short term. We would inflict more damage on ourselves than on them.”

Lindner suggested that instead of a general ban on all energy imports from Russia, the EU could look separately at oil, coal and gas, as alternative suppliers for each of the fossil fuels could be found at varying speeds.

After years of prospering from Russian energy imports, Germany is convulsed by a debate over how to unwind a business relationship that critics say is financing Russia’s invasion of Ukraine. Russia supplies 40% of Europe’s gas needs.

Chancellor Olaf Scholz’s governing coalition appears at odds over a ban on Russian energy imports and pressure is mounting on European leaders to impose more punitive sanctions on President Vladimir Putin’s government in the face of mounting evidence of atrocities against Ukrainian civilians by the Russian army.

Defence Minister Christine Lambrecht said on Sunday that the European Union must discuss banning the import of Russian gas after Ukrainian and European officials accused Russian forces of committing atrocities near Kyiv, raising hopes that Germany was rethinking it opposition to a ban.

Economy Minister Robert Habeck said he opposes an immediate ban on Russian fossil fuel imports.

“We are working every day to create the preconditions and the steps toward an embargo,” Habeck said during a news conference on Monday, adding that this approach “harms Putin daily”.

Markus Soeder, the conservative premier of the wealthy state of Bavaria, criticised the government for what he said was an ideological focus on switching only to wind and solar while pushing ahead with plans to shut down the last nuclear power plants this year.

“We need five nuclear power stations for another five years and a pipeline from southern Europe to southern Germany,” he said. “We need to look into fracking.”

Russian gas was originally envisaged as the “bridge” that would fuel the economy between the end of nuclear power and its full replacement by renewables.

Germany has tightened sanctions on Russian executives, politicians, technical goods and financial flows, but has stopped short of blocking oil, gas and coal, saying that would hurt Germany more than the Kremlin.

Economic analysts have said Germany will face a steep recession if it stops importing Russian energy.

Habeck said Germany was seeking to reduce Russia’s indirect economic influence over Germany’s energy industry. He cited the 54.2% share Russia’s Rosneft holds in an eastern German refinery, PCK Schwedt, which processes gas piped from Russia.

Habeck’s ministry is reviewing a bid by Rosneft to increase its share in Schwedt to 91.67%, as agreed last November.

(Reporting by Joseph Nasr, Vera Eckert, Thomas Escritt, and Tassilo Hummel; Editing by Barbara Lewis and Grant McCool)