Germany has made a controversial call on its western allies for greater co-operation with Russia on climate change and to repair frayed relations at a time when the US is considering upping sanctions and targeting Russia’s sovereign debt.

The EU should develop a “concrete and detailed strategy” on global warming and “selectively engage” Russia on these issues, the German government said in a document that will be presented to the EU during a general meeting on March 22, the Financial Times reported on March 7.

The EU remains divided over Russia as its leading companies remain heavily invested in the country, which is also one of the block's major trading partners.

If the so-called nuclear option of banning US investors from buying and holding Russian debt – both its Eurobonds and the Russian Ministry of Finance ruble-denominated OFZ treasury bills – is adopted, then Russian Foreign Minister Sergei Lavrov has made it clear the response by the Kremlin will be extreme.

Lavrov laid out new rules of the game in a speech in February and made it clear that Russia would no longer tolerate sanctions that “damage the economy.” The Kremlin has already said that it would regard sanctions on its debt as an act of economic war and the result could lead to something that look very much like a new Cold War. Until now despite the prickly relations the Kremlin has been willing to engage in dialogue over many international issues such as climate change, and the chaos in Syria and Libya, albeit these co-operation efforts are still difficult.

As bne IntelliNews has argued elsewhere, the EU is a lot softer on Russia than Washington due to its business ties and has already tried to play down tensions that erupted following The European Union's top diplomat Josep Borrell's trip to Moscow by imposing very light sanctions on Russia in February provoked by a court decision to sentence opposition activist Alexey Navalny to 2.8 years in jail on February 2.

The policy document calling on the EU to go soft on Russia highlights the deepening divisions within the EU on what to do about Russia. In the first round of sanctions imposed by the Biden administration, the US was careful to co-ordinate with Brussels and the sanctions the US imposed in March mirrored those imposed by Europe. But that may not last.

Europe is becoming increasingly divided over which direction to go in. Berlin and Paris have both attempted to engage with Russia and bring it to the negotiating table. Other countries such as Italy, Hungary and Serbia openly support deepening co-operation with Russia and quickly turned to Moscow for supplies of its Sputnik V vaccine. And another group, comprising Poland and the Baltic states, is openly hostile to Russia.

“While a fundamental change in Russia’s foreign policy appears unrealistic in the short term, managing our challenging relations with Russia must remain a key foreign policy priority for the European Union,” the document said, as cited by the Financial Times.

“At the same time, the EU has to forcefully seize opportunities to push Russia towards taking more responsibility for global [problems] such as security, conflict resolution, climate, environment, health, trade or migration.”

The document is unsigned and labelled a “non-paper”, which is the protocol for a policy proposal to the EU, which the government is not formally committed to.

While the paper lists Russian interference in politics and human rights and civil society abuses, it also says Russia has an “indispensable” role in helping to solve various global policy problems. It concluded that the EU has a “vital interest” in stable and predictable relations with Russia.

Borrell went to Moscow with this agenda in February, where he visibly pulled his punches at a meeting with Lavrov and downplayed the arrest and jailing of Navalny, only to be humiliated after Lavrov chose to expel three EU diplomats while sitting across the table from Borrell.

However, it seems that even this diplomatic slap in the face has not led to a hardening of the EU’s line. It even suggests that it is taking Lavrov’s threat seriously of break off diplomatic relations with the EU, should the West continue its sanctions policy on Russia. While Washington will be less inclined to hold off on sanctions, the Kremlin is presumably calculating that US President Joe Biden’s desire to repair trans-Atlantic relations and his commitment to co-ordinate policy on Russia with Brussels can be used as a lever to contain US sanctions too.

The German paper singled out co-operation with Russia on climate change in particular, which is a truly global issue.

“While so far not a policy priority for Russia, environmental disasters and climate change effects felt in its territory become increasingly relevant for Russia’s population and thus for the government,” the document says, reports the FT.