Trade relations: German companies worried about Russia

Status: 15/02/2022 3:16 p.m.

Many German companies maintain close business contacts with Russia. The current conflict with Moscow is also of concern to businesses. However, the investment climate had suffered before.

By Notker Blechner,

A few years ago, Russian President Vladimir Putin was another welcome guest in Germany. At the Hanover Exhibition in 2013, he walked into the halls with then-Chancellor Angela Merkel and top German managers. The only protests he saw firsthand came from Femen activists.

Hardly any German businessman now dares to pose in public with Putin. Even the annual German-Russian business meeting between top German managers and Putin, scheduled for a teleconference in early March, is now becoming a political issue.

hope for a peaceful solution

German companies in Russia – from VW, Siemens to Claas Landtechnik – are worried about the crisis in Ukraine. They hope for a peaceful solution to the conflict and warn of severing ties with Russia. “Where will it lead if all contacts are cut off and all projects are frozen, as some carelessly demand?” asks Rainer Sele, President of the German-Russian Chamber of Commerce Abroad. It has pledged to maintain German-Russian trade relations for weeks. “Economic contacts have ensured peace and prosperity,” he said. Even in the dark days of the Cold War, the German economy was always a bridge to the Soviet Union.

Despite EU sanctions over Russia’s annexation of Crimea and restrictions on the coronavirus, the German economy has invested more than 7 billion euros net in the largest country on earth in the last five years. “Russia remains a lucrative market for our companies because of the willingness of the population to spend, even if the weak economy and the coronavirus crisis are slowing growth,” said Matthias Schepp, chairman of the Chamber of Commerce (AHK) and spokesman. of German companies. in Russia. Large and medium-sized companies invest strategically and in the long run in Russia.

Mandatory exams for foreign top managers

However, the investment climate has recently deteriorated significantly. German businessmen were particularly annoyed by the mandatory medical examinations introduced at the turn of the year for foreigners working in Russia. “Foreign managers and engineers are subject to discrimination and time-consuming processes, which are detrimental to the investment climate, even though they promote investment in Russia in their countries of origin,” Schepp said.

Individual German companies are already withdrawing from the Russian market. According to AHK, the number of German companies fell by eight percent to 3,651 last year. “Even more companies will pack their bags in 2022 if solutions to stabilize the business climate are not found soon,” says Schepp. In 2011 there were still 6,300 German companies in Russia.

15th among export partners

Russia is still a major sales market for German companies, even though it has lost its importance. According to the Federal Statistical Office, the giant country ranked 15th among foreign trade partners for German exports in 2020. At 23 billion euros, Russia’s share of total German exports was just under 2% at the time. Preferred German export products include machinery, cars and car parts, chemicals and electrical machines.

Russia, on the other hand, supplies mainly raw materials, crude oil, natural gas and non-ferrous metals to Germany. Russia contributes a good two percent of all German imports. This puts the country in 14th place among foreign trade partners. Germany is highly dependent on Russia for gas. Half of the gas bought by Germany comes from Gazprom & Co. With the new Nord Stream 2 pipeline in the Baltic Sea, the percentage will increase. The gas pipeline has been completed but is not yet operational.

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