Partner Nation Russia

HANNOVER | | russische-foederation

HANNOVER (Own report) - The German Chancellor and the Russian President attended yesterday's opening of the annual Hannover Industry Trade Fair. This year, Russia was the fair's chosen "partner nation," a move to help promote German-Russian economic relations. The German Committee on Eastern European Economic Relations announced a German-Russian economic summit to be held today. Since the SPD/Green coalition government encouraged the economic cooperation ten years ago, the trade volume has grown from 15.1 billion Euros in 1998 to more than 80 billion in 2012 - to Germany's advantage. Germany is ensuring its access to energy resources from Russia's huge deposits, while also tapping into the lucrative market for the German export-oriented industry. The German industry needs this market, since its sales to the southern Euro zone are tapering off, due to the economic crisis. Berlin is also seeking to boost this cooperation because of China's growing influence in Russia. Moscow and Beijing are not only planning to expand their bilateral economic relations, they are also increasing their political and military cooperation - at the expense of Western hegemony, as seen from the German perspective.

Increased Cooperation

The German Chancellor and the Russian President have attended yesterday's opening of Hannover's annual Industry Trade Fair. The world's most important industrial fair has chosen Russia to be this year's "partner nation." This focus on Russia is among the efforts to increase the economic cooperation between the two countries, Chancellor Merkel explained in her opening speech. "Germany and Russia - shaping the future together" is the motto of the "Russia Year," now taking place in Germany and the "Germany Year" being reciprocated in Russia. The Hannover Fair should help German and Russian companies to "increase their cooperation and make new contacts," according to Merkel.[1]

Unequal Trade

Since the SPD/Green coalition government - and Putin's first presidential term - relations between the two countries have been particularly marked by intensive efforts to enhance German trade with Russia. While only reaching 15.1 billion Euros in 1998, the trade volume grew significantly since 2000, reaching a volume of 38 billion Euros in 2005, the last year of the Schröder/Fischer government. According to official statistics, a record volume of 80 billion Euros was reached in 2012. Russia has, therefore, become the tenth most important German business partner - with tendency rising. But, the trade is very unequal: 75 percent of the German imports are of oil and gas and 10 percent, metallic raw materials, while Russia's increasingly degenerating economy is mainly importing modern industrial products from Germany. The German export industry is thereby ensuring steady profits, while its sales to the crisis-ridden southern Euro zone are declining. According to the German Committee on Eastern European Economic Relations, the Russian share of purchases of total German exports have doubled to currently 3.5 percent, over the past ten years.[2]

No Longer Unrivalled

However, the economic influence of Germany, which, for years, had been Russia's most important trade partner, is anything but unrivalled today. Russian-Chinese trade has been strongly booming for years, last year reaching a volume of US $88 billion (68 billion Euros) and is expected to continue to sharply grow - to a volume of US $100 billion by 2015 and US $200 billion by 2020. The presidents of the two countries reached accords to this effect in Moscow in late March, on the occasion of China's new President, Xi Jinping's first official visit. His first foreign visit was to Russia, thereby, sustaining a practice of more than a decade. Since 2000, the presidents of the two countries have reiterated the high significance, they ascribe to their countries' bilateral relations, by also reciprocally making the first official foreign visit to the country of the other.

Global Political Significance

In Berlin, this is, by no means, merely of economic significance. China's economic influence in Russia is being taken very seriously in the German capital. Chinese companies have long since extended their activities from the far eastern regions of Russia, to now do business throughout the country and, to a growing extent, transacting their own investments. Even on an intermediate basis, German industry, which is existentially dependent upon foreign customers, is in danger of losing ground. Besides, Chinese-Russian cooperation has eminent global political significance, above all, representing an obstacle to the more powerful western forces' attempts to roll back China's growing global influence. As an attempt to ward off western aggression, this cooperation is comprised of a series of mechanisms, for example, the emerging powers' BRICS economic alliance,[3] or the more military Shanghai Cooperation Organization (SCO)[4]. Moscow represents, with Beijing, the backbone of both the BRICS and the SCO. Moscow's close cooperation with Beijing provides it with a larger margin of manoeuvre in relationship to the West, as well. At the same time, the Russian government is seeking to avoid being exclusively linked to the People's Republic of China. In the Russian capital, some fear that Moscow will not be able to compete with Beijing's economic and political clout in the long run.

Accompanying Power Struggles

This complicated conglomeration sets the backdrop for the current efforts to further enhance German-Russian economic cooperation and thereby consolidate the bilateral relations. The German Committee on Eastern European Economic Relations [5] has announced that, in cooperation with the Russian Ministry for Industry and Trade, it will hold a German-Russian Economic Summit, today, at the Hannover Trade Fair. Alongside the German Minister of the Economy, the Russian Minister for Industry and Trade, as well as, Russia's Minister for Economic Development, board chairpersons of major German and Russian enterprises are expected to attend.[6] At the moment, the aspirations for cooperation are being overridden in the media, by the dispute over the new Russian restrictions that impinge also on German party-affiliated foundations - instruments of German foreign policy influence.[7] This demonstrates that the cooperation is not advancing without a hitch, but is flanked by hefty power struggles. For example, these foundations provide Berlin with the means for maintaining close contact to sectors of the Russian new middle classes, who are in active opposition and apply pressure to Putin's government. (german-foreign-policy.com reported.[8]) So far, the mutual efforts to enhance German-Russian economic cooperation have not been affected.

[1] Grußwort der Bundeskanzlerin anlässlich der Hannover Messe 2013; www.hannovermesse.de
[2] Deutsch-Russischer Wirtschaftsgipfel; www.ost-ausschuss.de 03.04.2013
[3] BRICS ist ein lockerer Verbund von Brasilien, Russland, Indien, China und Südafrika.
[4] Der SCO gehören China, Russland, Kasachstan, Kirgistan, Tadschikistan und Usbekistan an.
[5] zum Ost-Ausschuss der Deutschen Wirtschaft s. unsere Rezension zu dem Band "Diplomaten der Wirtschaft" von Sven Jüngerkes
[6] Deutsch-Russischer Wirtschaftsgipfel; www.ost-ausschuss.de 03.04.2013
[7] see also "The Most Effective Instruments of German Foreign Policy"
[8] see also German-Russian Contradictions