A $134 million deal between Germany’s Rheinmetall, the country’s largest weapons manufacturer, and the Russian military to install a highly advanced training facility in central Russia has been nixed, Süddeutsche Zeitung reported on Monday. Later in the day, Germany’s Economy Minister confirmed that the deal, which stalled earlier this year during the Crimea annexation, would be permanently halted.The Kremlin reacted with predicatable fury. The defense ministry ordered a lawsuit to be filed against Rheinmetall. “Naturally we’ll defend our interests,” a deputy minister told RIA Novosti. The facility, reportedly “the most modern training facility in all the world with simulator-supported training,” would eventually be capable of training 30,000 soldiers annually. Allowing the deal to go ahead “cannot be justified,” Germany’s economy minister announced. “It is not about money, it is a question of human lives.”The cancellation of the deal comes amidst the most frigid relations between Germany and Russia since the end of the Cold War. Once, Putin and Merkel were reasonably cordial, their relationship efficient and business-like. The appointment of Frank-Walter Steinmeier, an avowed friend of Russia and a fan of a style of realpolitik that ignored the Kremlin’s human rights record in favor of better economic and political ties, as foreign minister, at the end of 2013, was seen as an effort to accelerate years of warming relations between Moscow and Berlin. But Merkel and Steinmeier both changed course drastically when the Ukraine crisis erupted. Merkel vowed to impose sanctions that would do “massive” damage to the Russian economy. The chill deepened when MH17 was shot down. Merkel delivered a blunt message to Putin three days later: Call me if you have progress to report in defusing the conflict. They haven’t spoken since.The WSJ summed up the current climate:
The silence marks a breach in perhaps the most important relationship in European geopolitics, illustrating the daunting challenges facing the West in trying to calm the crisis in Ukraine. More broadly, the frayed relationship between Ms. Merkel and Mr. Putin shows the disintegration of a decadeslong effort by both Germany and Russia to bind the World War II adversaries to each other. Mr. Putin, in particular, appears to have given up, for now, on his yearslong project of nurturing Germany into the role of Russia’s closest European partner, illustrating the increasing degree of international isolation he seems prepared to accept.
The cancelation of the arms deal, small peanuts in a multibillion dollar industry, is more a symbolic blow than a stab in the gut of the Russian economy. The broader sanctions regime is having only a limited effect. “Russian sanctions begin to backfire,” Joe Weisenthal reported yesterday for Business Insider, citing a Reuters report that noted the eurozone’s economic outlook is slipping dramatically. Germany is taking it the hardest. Making matters more difficult are the disparate intentions and interests of European governments with regard to Russia and sanctions; France, of course, is eager to go ahead with its arms deal with Russia (the sale of the two helicopter carriers), even as Germany cancels its own.The lackluster effects of the sanctions have drawn attention to the question of whether NATO is prepared for a military confrontation, in one form or another, with Moscow. As a striking article on the front page of this morning’s New York Times reports, Pentagon and intelligence officials say that Russia has stationed 17 battle-ready brigades on the border with Ukraine, and provided covering fire for rebels fighting the Ukrainian government. The number of troops is uncertain: possibly 10,000-13,000 or “perhaps as high as 21,000.” Many of the Russian vehicles there are emblazoned with insignia of peacekeeping forces, leading some analysts and government officials to suspect Russia might try to spin an invasion of Ukrainian territory as a “peacekeeping mission.” The White House is taking this threat very seriously, the Times reports. Worryingly, however, an unnamed Pentagon official pointed out that the U.S. and NATO are quite unprepared for whatever Putin is up to. “We just don’t know what he’s thinking.”