Washington is tightening the economic screws on Berlin over a looming conflict with Iraq, threatening to clamp down against both the government and private companies in staunchly anti-war Germany, according to press reports.
The US has decided to freeze all but the bare minimum of its planned multi-million investments in its German military bases "because of the political situation," the weekly Welt am Sonntag will report on today.
A letter from US Defense Secretary Donald Rumsfeld's office announcing the decision has been sent to the US command in Germany, according to the weekly.
Washington is also threatening to clamp down on German companies who maintain their trade ties to Iraq, the newspaper Die Welt said in its edition due out yesterday.
The George W. Bush administration, in a letter to Berlin's economy ministry, said companies that do business with Baghdad would compromise their ties to their US trade partners, according to the daily.
Germany-Iraq trade ties are worth some 336.5 million euros (US$364.0 million dollars) yearly, according to German government statistics.
Blocking US military investment across Germany could mean a major loss of capital, as it would shelve a 100-million-euro US Air Force investment in the southwestern state of Rhineland-Palatinate. Renovation at the US military airport at Ramstein, in the same state, could also be affected by the plan, the paper said.
Germany has more US military bases than any other European country.
Berlin, a traditional US ally, has come out strongly against waging war on Iraq, saying it will not participate in military operations and will not vote in the Security Council in favor of the use of force.
Pentagon chief Rumsfeld has lashed out several times at Germany, recently lumping it together with Libya and Cuba -- Washington's sworn enemies -- as countries who would not participate at all in a US-led coalition against Iraq.
He also has chided Germany and France for being part of an "old Europe" because of their calls for continued UN inspections and reluctance to use military force to disarm Saddam Hussein.
Meanwhile, Russia's economy can withstand the shocks of a war in Iraq even though it is likely to lead to a long-term fall in oil prices on which the budget heavily relies for revenues, Finance Minister Alexei Kudrin said Friday.
"With Iraqi oil on the world market, prices may fall and create problems for us. But we can handle it," Kudrin, who also serves as a deputy prime minister, told Moscow Echo radio.
"We have prepared for this scenario," he said. "It will be possible to meet the budget in full."
Kudrin pointed out that global oil prices were likely to shoot up in the first weeks of a war because of market uncertainties about the campaign's success.
He added that time would be required to start up many of Iraq's mothballed oil wells and that Russia's economy should not suffer in the short or medium term as a result.
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