On Monday, Economy Minister Sigmar Gabriel announced he had withdrawn authorization for the building of a military training camp in the Volga region of Russia which could train up to 30,000 soldiers a year.
The deal with German arms group Rheinmetall, reportedly worth around €123 million, was first put on hold in March and then scrapped on Monday.
"It is not about money, it is a question of human lives," Gabriel told reporters.
Russia previously called the decision to halt the arms deal "unconstructive," accusing Berlin of acting under pressure from the United States.
A defence ministry official in Moscow was quoted by state news agency Itar-Tass as saying "if the Germans break the contract, legal proceedings would follow".
A spokesman for Rheinmetall said they were in talks with the German government, but had not come to an agreement with them over damages. Although they added €100 million was an “appropriate figure”.
Rheinmetall, which operates a similar centre for the German military, had said in March that the company would fulfil its contractual obligations to build the centre.
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The camp was scheduled to open later this year.
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