BERLIN (Reuters) -Russia has turned increasingly to blackmail and financial incentives to hire Germans to spy for it after the blow dealt to its intelligence services by Europe's expulsion of some 600 Russian diplomats, Germany's domestic security service said.

The Federal Office for the Protection of the Constitution (BfV) said Russian intelligence services were spending big to recruit agents in Germany despite Western attempts to limit their operations since Moscow's invasion of Ukraine.

"Russia is working hard to compensate for the German government's reduction in the number of Russian agents in Germany," BfV chief Thomas Haldenwang told a news conference upon presenting the agency's annual report.

Two German citizens who were charged last August with high treason for spying for Russia had each been paid an estimated 400,000 euros ($428,560) for their services, the BfV said.

"The agent fees show that Russia's services continue to have enormous financial resources with which to pursue their intelligence goals," it added in the report.

Particularly at risk of being targeted by Russian security services were Germans who lived in Russia or regularly travelled there, including German diplomats, who could easily be made vulnerable to blackmail attempts.

"As soon as they have compromising information about their targets, these services are not shy about employing aggressive recruitment techniques," they added.

NATO reaffirmed this month its concerns about Russian espionage and called for tougher action in response to what it said was a campaign of hostile activities, including sabotage and cyber attacks. Germany is one of 32 NATO states.

FAR RIGHT

Russia's invasion of Ukraine on Feb. 24, 2022, was a rude awakening for many in Germany's security establishment after years in which Berlin had attempted to bind Moscow into the international legal order through a web of trade and especially energy links.

A recent surge in support for the far-right Alternative for Germany (AfD) party and the authoritarian-left BSW party has also helped trigger a major rethink. Both parties often echo Kremlin talking points on the war, including in their opposition to providing Ukraine with arms to defend itself.

The number of right-wing and left-wing extremists rose once more last year by 4.6% and 1.4% respectively to 40,600 and 37,000, according to the BfV report, contributing to public discourse moving away from factual debate towards "aggressive confrontation".

Russia has proved adaptable in finding ways of influencing events in Germany even after its media channels were banned and 600 of its diplomats stationed around Europe were expelled, the BfV said.

Some of those influencing efforts have shifted to the social media platform Telegram, which is difficult to police, while spies are now being attached to international organisations. Russian officers tasked with handling informants are now travelling to do so rather than being based in Germany.

Far-right groups are also a receptive audience for Russian influence operations. These include the Reichsbuerger (Citizens of the Reich) conspiracy theorists, some of whom are now on trial for plotting a coup against the German democratic order for which they had sought Russian support.

Among new conspiracies circulating in far-right circles, the BfV said, is a groundless belief that the war in Ukraine is intended to create a depopulated wasteland in the country's east to which the population of Israel could be relocated. It said Ukrainian President Volodymyr Zelenskiy, being Jewish, was falsely presented as being one of the conspirators.

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(Reporting by Thomas Escritt and Sarah MarshEditing by Gareth Jones and Rod Nickel)

By Thomas Escritt and Sarah Marsh