Skip to comments.Economic War with Russia: A High Price for German Business
Posted on 04/16/2014 9:27:03 PM PDT by PieterCasparzen
Both the Americans and the Europeans have ruled out the possibility of a military response and instead want to strike Putin where he is most vulnerable: Russia's economic dependency on the West. They want to show the Russian president that the economic damage caused by sanctions will outweigh any regional political advantage won through his actions.
The main role here also continues to lie with Germany. The reason is simple: The country has very close business relations with Russia and has the greatest capacity to exert pressure.
The consequences would be serious -- for both sides. Last year, Germany and Russia had trade in goods of close to 77 billion ($107 billion).
"I am very worried that we are going to unleash a downward spiral of sanctions and counter-sanctions that don't help anyone," said Eckhard Cordes, chairman of the Committee on Eastern European Economic Relations, an organization representing German business interests in the east. Cordes has called for greater understanding of Putin's position. "Many mistakes have been made in the relationship between Russia and the West, and those mistakes have not only been made by the Russian side," he said. Klaus Mangold, the chairman of the supervisory board of Rothschild Deutschland and Cordes' predecessor on the Eastern Europe Committee also opposes taking punitive measures against Moscow. "It would be a mistake if the West were to spark a new level of escalation following the Crimea referendum," he said. "Sanctions are the wrong approach."
The German government is nevertheless hoping to prevent an economic war. This approach is also prudent out of domestic political considerations. A survey conducted by German pollster Forsa found that two-thirds of all Germans reject sanctions against Russia relating to the Crimean crisis.
(Excerpt) Read more at spiegel.de ...
Between 1870-1914 the German=Russian trade axis was one of the world’s most dynamic. Knowledgeable Germans realize that Russia with its boundless resources and potential will once again be Germany’s prime economic focus. Germans are tired of their supplicating, debt ridden EU partners. The irony is that Ukraine, Poland and Belarus sit on that axis and will prosper as well. A West Ukraine v East Ukraine/Russia war would benefit only those who fear this inevitable development.
It’s doing pretty good now; also from the article:
“Last year, Germany and Russia had trade in goods of close to 77 billion ($107 billion). Russia primarily supplies petroleum and natural gas to Germany. Germany, on the other hand, exports mechanical engineering products, medicines, trains and automobiles to Russia. More than 6,000 German companies are registered in Russia and, together, they have invested 20 billion in recent years. German chemical giant BASF has holdings in Siberian gas fields and Russian gas monopoly Gazprom obtained natural gas storage facilities in the state of Lower Saxony in exchange. Without special chemicals from Germany, it would be difficult for Russia to refine its crude oil. It would be a shattering blow to supplies for Putin’s massive country if Merkel were to turn the screws on Germany-Russian economic relations.
At the same time, Germany’s business community would also have to assume some severe losses. All it takes is a mere sampling of businesses to see just how deep economic ties go between Berlin and Moscow.
Joe Kaeser, the recently appointed CEO of the multinational engineering firm Siemens traveled to Russia three times within his first 100 days in the position to arrange further investments. And building materials manufacturer Knauf alone employs more than 5,000 people in its Russian plants. All of that could now be at stake.
Indeed, even though serious economic sanctions have yet to be applied, the mere threat that they might has been felt. German retailer Metro wanted to take its Russian subsidiary public this year, but the plan is now imperiled. Volkswagen also wants to invest a further 1.2 billion in the expansion of its Russian plants. It is now uncertain whether this will happen. Last Friday, Germany’s state-owned KfW development bank had planned to sign a contract together with Russia’s government-held VEB bank for a 900 million investment initiative on behalf of mid-sized companies, but the German side cancelled the event at the last minute.”
~Between 1870-1914 the German=Russian trade axis was one of the worlds most dynamic. Knowledgeable Germans realize that Russia with its boundless resources and potential will once again be Germanys prime economic focus. Germans are tired of their supplicating, debt ridden EU partners. The irony is that Ukraine, Poland and Belarus sit on that axis and will prosper as well. A West Ukraine v East Ukraine/Russia war would benefit only those who fear this inevitable development.~
Russian-German alliance is that the British diplomacy has feared the most during all the known history.
Both people has enormous potential but also has critical flaws restricting them from exercising it to a max. Another interesting part is that Germans lacks in terms of typical personal characteristics are actually present with the Russians and vice versa.
Russians have always been a bit in awe of the Germans. Germans had an immense role in industrializing Russia after 1870. Nicholas, the last Czar was astonished that somehow he was fighting his “dear cousin” the Kaiser which turned out to be a catastrophic disaster for both countries. Even Stalin was enamored with Germany and would not and could not believe intelligence reports and other evidence that Hitler and Germany would attack the Soviet Union.
And it won’t be wrong to say that many Germans has similar feelings towards Russians.
The Molotov-Ribbentrop Pact showed that Russians and Germans can live together in peace and harmony. Their neighbors might not be so lucky, but as Thucydides once wrote, in the Melian Dialogues: “Right, as the world goes, is only in question between equals in power, while the strong do what they can and the weak suffer what they must.”
Wonder if Thucides wrote “Beware of men with mustaches.” However it is ironic that Moscow was to Berlin what Syracuse was to Thucides’ native Athens.