Merkel Said to Defer Airbus Satellite Sale to Russia on Ukraine

Apr 11, 2014 6:13 am ET

April 11 (Bloomberg) -- The German government has deferred a decision on granting Russian export licenses to Airbus Group NV’s defense and space arm after Vladimir Putin’s annexation of Crimea, two people familiar with the negotiations said.

The German move puts on ice the sale of satellite technology worth as much as 700 million euros ($973 million), said one of the people, both of whom asked not to be named because the deliberations are private and ongoing. It affects talks at an advanced stage between Russia and Airbus over the sale of so-called SAR orbiters, which operate a unique radar technology, the person said.

The suspension of license talks suggests that Chancellor Angela Merkel is prepared to brush aside German corporate unease and follow through on her commitment to impose economic sanctions on Russia for its incursion into Ukrainian territory. The decision on the satellites was taken by Merkel’s government this month, the people said, as Russia massed troops on the border with eastern Ukraine.

“Nobody should harbor any illusion,” Merkel told members of her Christian Democratic Union party on Apr. 5. “As different as we are in Europe, it’s our good fortune to be united and we will unite to make that decision” on further sanctions, she said.

SAR, or Synthetic Aperture Radar, offers cloud- and smoke- piercing satellite imagery that can be used to monitor terrain buried by sandstorms, volcanic eruptions or forest fires, one of the people said.

Internal Matters

A spokeswoman for Airbus’s Astrium space and defense division declined to comment on April 9.

The Economy Ministry in Berlin, which awards export licenses, said that it couldn’t answer questions on what it said were internal company matters.

The heads of Adidas AG and ThyssenKrupp AG are among German executives who have questioned the need for economic sanctions against Russia. As Russia’s largest European Union trading partner, Germany stands to suffer from any wider measures taken against President Putin’s government.

Soured relations with Russia may cause “a certain measure of problems for us,” Merkel told her party. Europe shouldn’t be “filled with fear,” she said.

--With assistance from Patrick Donahue in Berlin.