German industry steps up drive to prevent Russia sanctions

BERLIN,  May 17 (Reuters): German industry is ramping up efforts to dissuade Chancellor Angela Merkel from imposing tough new economic sanctions on Russia over Ukraine, warning of lasting damage to domestic firms and the broader economy if Moscow is hit hard.
Although German companies have toned down their public criticism of sanctions since the CEO of Siemens was vilified in the press for meeting Russian President Vladimir Putin in late March, a behind-the-scenes lobby effort remains in full force.
A confidential paper from the German-Russian chamber of foreign trade, which was sent to the government last week, shows the extent of the concern in German business circles as a May 25th presidential election in Ukraine nears.
Merkel has said she will press for more punitive measures against Russia if the election is disrupted.
The two-page position paper, dated May 7th, says the Ukraine crisis is already having a "massive impact" on German business in Russia and warns of dire consequences if Europe follows through on threats of economic sanctions.
"Deeper economic sanctions would lead to a situation where contracts would increasingly be given to domestic firms, projects would be suspended or delayed by the Russian side, and Russian industry and politicians would turn to Asia, in particular China," the paper says.
The resulting loss of market share for German and European firms would be "long-term and sustainable", causing "irreparable damage" to Germany's competitive position, according to the paper, provided to Reuters by an official in Berlin.
Moreover, sanctions would lead to job losses in Germany and expose companies to "massive compensation" claims if they were forced to break contracts with their Russian counterparts, it says.