* Delivery of combat simulator equipment to Russian army
* Berlin's action goes beyond EU sanctions targeting future
* Rheinmetall says talking to German govt
(Adds Gabriel quotes)
BERLIN, Aug 4 Germany has permanently halted
Rheinmetall's planned export of combat simulation
equipment to Russia, the Economy Ministry confirmed on Monday,
going beyond recently imposed European Union sanctions which
block future defence contracts.
Economy Minister Sigmar Gabriel, a Social Democrat (SPD),
originally blocked the deal in March and has now permanently
stopped it, the ministry said.
The contract, worth about 100 million euros, had been
approved by Germany's previous government.
"This is not about money, this is about lives," Gabriel told
reporters on Monday in Potsdam when asked if the government
would face compensation claims from Rheinmetall.
He added that he did not know of any other projects in
Germany facing a similar fate.
"I can confirm that, in the light of the EU sanctions,
permission to export a combat training centre has been revoked,"
a spokesman said.
A spokeswoman for the Economy Ministry told a news
conference that most of the combat simulation equipment had not
yet been sent to Russia and that the incomplete system was not
capable of being used by Russia.
"This shows that we're imposing a more restrictive arms
policy," she said.
When asked if Rheinmetall had a right to compensation, she
said in principle they do, but must make a claim.
Rheinmetall earlier on Monday said that it was in
talks with the German government.
It said Berlin's intention to stop to the deal had now been
delivered in writing. Rheinmetall declined to comment on the
details of the contract nor on whether it might claim
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 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 warship.
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, Gernot Heller and Tom Kaeckenoff;
writing by Alexandra Hudson and Erik Kirschbaum; editing by