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Rheinmetall's Russia business

March 19, 2014

German defense technology group Rheinmetall has said it would stick to its contractual obligations with Russia in completing a military training center there. The deal has ruffled the feathers of some German lawmakers.

Logo der Rheinmetall AG
Image: picture-alliance/dpa

Düsseldorf-based defense company Rheinmetall said on Wednesday that it would stick to a 2011 contract with Russia and complete what experts billed as the world's most modern military training center in Mulino.

The German firm said it was fully aware of the current political conflict over Crimea, but insisted it had to meet its contractual obligations with Moscow and finalize a combat simulation center where up to 30,000 soldiers could be trained annually.

During the presentation of a full-year earnings report on Wednesday, Rheinmetall CEO Armin Papperger told reporters he hadn't received any signs yet from the government in Berlin that the project had to be stopped.

The moral dimension

The Economics Ministry argued Rheinmetall's delivery plans had been known since 2011 and fully documented in the government's annual report on the sensitive issue of arms exports. It added the deal did not include the supply of weapons of war to Russia which had not been allowed for over a decade now.

The 100-million-euro ($139.2-million) contract with Russia had widely been seen as part of Rheinmetall's endeavors to turn to alternative markets in the face of shrinking defense budgets in European Union member countries.

Controversial Deal - A German natural gas storage facility and Gazprom

But now, with the Russian-Ukrainian conflict threatening to spin out of control, a number of German lawmakers from the opposition Greens have criticized the German defense group for just carrying on regardless. They urged the government to stop the deal.

Green legislators and some ruling conservatives had earlier also voiced their concerns about German utility giant RWE announcing its resolve to sell its oil and gas unit DEA to an investment fund owned by a Russian oligarch.

hg/msh (dpa, AFP)