BERLIN Aug 4 Germany's Economy Ministry has
confirmed it has halted Rheinmetall's export of combat
simulation gear to Russia, going beyond recently imposed EU
sanctions which block future defence contracts.
Economy Minister Sigmar Gabriel, a Social Democrat (SPD),
has blocked the deal which was approved by Germany's previous
government, the ministry said.
"I can confirm that in the light of the EU sanctions,
permission to export a combat training centre has been revoked,"
a spokesman said.
Rheinmetall said on Monday it was in talks with
the German government.
Berlin's intention to stop to the deal, flagged in March,
has been delivered in writing, the company said. Rheinmetall
declined to comment on the details of the contract worth some
100 million euros, nor on whether it might seek compensation
from the government.
The company has repeatedly said that sanctions against
Russia would not have a major impact on its business because the
combat training centre, its only major contract with the
country, has been largely delivered and paid for.
Germany's Sueddeutsche newspaper said the combat training
centre, which was to be built in the town of Mulino in the Volga
region and was expected to go into service this year, could
train 30,000 soldiers a year on high-tech simulators.
Tough new economic sanctions against Russia will hurt
Germany's economy but they are necessary for the sake of peace
in Europe, Gabriel, who is also German vice chancellor, said in
a television interview on Sunday.
In contrast, France is pressing ahead with a 1.2 billion
euro ($1.6 billion) contract to supply Russia with a Mistral
European Union sanctions that took effect on Friday target
Russia's banking, defence and energy sectors because of Moscow's
support for pro-Russian separatist rebels battling Kiev's forces
in eastern Ukraine.
(Reporting by Andreas Rinke and Tom Kaeckoff; writing by
Alexandra Hudson; editing by Jason Neely)