By Tony Paterson in Berlin
German intelligence chief Gerhard Schindler, pictured, says that cracks are beginning to appear in Russia's united front
Germany's intelligence services have informed Chancellor Angela Merkel's government that a power struggle is under way in the Kremlin with hardliners and oligarchs at loggerheads over how best to respond to western economic sanctions, according to media reports.
German intelligence chief Gerhard Schindler has told the Berlin parliament's foreign affairs committee that cracks are beginning to appear in the united front that President Vladmir Putin is seeking to present to the world, Der Spiegel magazine said on Sunday.
Mr Schindler was reported to have told the committee and subsequently Mrs Merkel personally that a struggle had broken out in the Kremlin with hardliners and oligarchs seeking to exert their influence on President Putin.
"According to German intelligence it is quite possible that some of the oligarchs who are worried by European Union sanctions will soon start putting economic interests above political concerns and try to put the brakes on Putin," Der Spiegel wrote.
Mr Schindler told MPs that unlike at the beginning of the Ukraine crisis, cracks were now beginning to appear in Vladimir Putin's power block. He was said to have made his comments during a weekly intelligence report "to parliament and the Berlin Chancellry.
The headquarters of Germany's intelligence agency, the Bundesnachrichtendienst (BND - Federal Intelligence Service) - Berlin
German intelligence service assessment of the power struggles under way in the Kremlin is likely to have influenced the Berlin government's position regarding economic sanctions against Moscow.
Germany had until only recently been wary of imposing economic sanctions against Russia for fear of damaging its wide- ranging business interests in Russia. German industry heads had warned that there would "only be losers" if sanctions were imposed.
However last week Mrs Merkel dropped her initial opposition to the idea and demanded that the EU impose rapid sanctions including economic penalties against Russia. The move underlined Germany's growing exasperation with President Putin's failure to investigate the shooting down of flight MH17.
The head of Germany industry's key eastern committee which oversees trade and business interests in Russia also recently dropped his opposition to economic sanctions and said it was now time to put political interests above business concerns.
German economics minister Sigmar Gabriel appeared to endorse the German intelligence findings. In an interview on Sunday he said that EU sanctions should specifically target wealthy Russian business leaders. "Above all we must hit the oligarchs, we have to do this, this coming week" he told Der Spiegel.
His remarks were echoed by Germany's veteran finance minister Wolfgang Schaüble. In an interview with Germany's mass circulation newspaper Bild am Sonntag on Sunday he said German business interests were "second" in importance when it came to foreign policy and Russia.
"Safeguarding stability and peace have top priority," he told the newspaper, " Any threat to peace and stability would moreover be the biggest danger for economic development," he added.
Wolfgang Schäuble, Germany's finance minister
Mr Schauble said that the existing sanctions against Russia were already beginning to take effect.
"The Rouble is losing value, Russia's budget deficit is growing and its economic development is bad. Even the Russian president sees this," he said. Calling for a united western front against Russia, he added: " Nobody is Moscow should start thinking that Russia can win with its approach."
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