German firms cool over Russia

The German-Russian Chamber of Commerce (AHK) said Tuesday that nearly two-thirds of German companies expect steady or even improved business with Russia this year. The AHK said its statement was based on a survey of 300 German firms doing business with Russia, conducted recently by the country's main foreign trade lobby group, the DIHK.

The AHK added, however, that the survey had also found about a third of the companies were already seeing their turnover declining, in some cases by up to 50 percent, as a result of the tit-for-tat sanctions war between Russia and Western countries over Ukraine.

According to the DIHK survey, companies are being directly hurt by specific trade embargoes or due to a lack of clarity about how to implement them. On the other hand, Russian firms wanting to place orders are facing higher financing costs as a result of a credit crunch and a devaluating ruble.

"The innovative German machinery makers and engineering companies, mostly medium-sized and small businesses, are being hit the hardest," DIHK Deputy Managing Director Volker Treier told a news conference in Berlin.

On balance, however, the sanctions had not yet had an impact on many German firms, Treier added, as for most of them it was still "business as usual."

Ineffective measures

Last year, Germany sold goods and services worth about 36 billion euros ($46.3 billion) to Russia, becoming Russia's biggest trading partner in Europe. About 6,200 German firms are active in Russia, with investment to the tune of 20 billion euros.

Small wonder that about 80 percent of the firms covered by the survey said they considered sanctions in general either not effective or an inappropriate tool for pursuing political goals.

Nevertheless, one-third still said the sanctions against Moscow were necessary even if they were hurting their own business. AHK President Rainer Seele said that they were a means to get all parties back to the negotiating table.

For the medium and longer term, sanctions were bound to hit their business, some 58 percent of the companies said, with 8 percent of them even weighing a complete withdrawal from Russia if the situation does not improve.

The European Union has readied a new round of sanctions to be imposed against Russia if a recent ceasefire agreed between the Ukraine government and pro-Russian separatists should collapse.

uhe/sgb (Reuters, AFP, dpa)