A leading German industry association has warned that EU sanctions against Russia could have a disastrous impact upon the country's vital engineering sector.

German industry association VDMA made the claim following the European Union’s decision to impose hefty sanctions against Russia in response to its annexation of the formerly Ukrainian region of Crimea.

Reinhold Festge

Reinhold Festge

VDMA President Reinhold Festge said at the Hannover Messe trade fair that while the EU was obliged to respond firmly to any infractions of international law, the German engineering sector would suffer considerably as a result of the sanctions, particularly given that the Eurasian giant is its fourth largest export market.

“It is absolutely clear that there has been a blatant breach of international law…it is also clear that it is necessary to draw the line,” said Festge. “But you have to know what you are doing when you continue to escalate, yelling and screaming.”

“This concerns the engineering sector’s fourth biggest market, and there is no other country that has invested in Russia as massively as Germany.”

Festge said an embargo would have a particularly negative impact upon the outlook for Germany’s mechanical engineering, one of the stalwart sectors of the country’s economy.

“A tough Russian embargo would have what it takes to hit the mechanical engineering sector’s economic development,” he said

German engineering association VDMA is one of Europe’s largest industrial groups, representing the interests of over 3,100 member companies including Siemens, ThyssenKrupp and MAN SE.

According to VDMA, engineering sector output is expected to recover significantly this year with a three per cent increase, as compared to a fall of 1.5 per cent in 2013.

The EU and United States have both launched sanctions against Russia in response to its annexation of Crimea and have warned of further economic punishment should the country attempt to expand further into Ukrainian territory.

In stark contrast to the efforts of Western governments to punish Russia for its audacious land grab, Siemens head Joe Kaeser travelled to Moscow in March to meet with President Vladimir Putin in order to shore up the firm’s interests in the country.