Wolfgang Buchel: "Process of lifting sanctions against Russia may begin this summer"

Germany was and still is the most important trade and economic partner of Russia in Europe, and one of the most important trade and economic partners in the world. Germany is the second most important partner after China for the Russian Federation. Therefore, Moscow proceeds from the fact that the economy should dictate the priorities for the development of bilateral relations. This morning, at a meeting with representatives of business circles of Russia and Germany in the framework of the Munich Security Conference, Russian Prime Minister Dmitry Medvedev stated: "We have known better times, when the political side of the relations between our two countries was different, when the communication of the president or prime minister of Russia with German business was not based on such a dose of politics ... It is impossible completely without politics. Considerations of political expediency often substitute economic logic."

According to Medvedev, the main problem is not the sanctions, which always end in nothing, but lost opportunities and lost money. "Because of sanctions, confrontation and the fall in energy carriers' prices, Russia has lost more than one third of its turnover with Germany over the last year, and with the entire European Union it has lost half of the turnover over the last few years. We had about 450 billion euros at the peak, but now, I think, it is 235 billion. The interests of specific exporting companies are suffering, which are losing positions in the market, earned in the course of years of hard work. Will this lead to political results, which were expected by political circles when making the relevant decisions? No. The history of our country, no matter how it was described in certain historical periods, when it was subjected to economic sanctions, clearly proves that nothing has changed. It also does not correspond to our long-term economic interests. You yourselves are working in different countries on many continents, you see how rapidly the economic landscape is changing. What is the problem? Competitors immediately occupy vacated market niches. Competitors immediately occupy! Under the influence of technological progress, entire enterprises are very often left out, sometimes even industries," Medvedev stated.

He admitted that he repeatedly met with colleagues from different European countries, with businessmen and politicians, heads of governments and states, who said: "Remove restrictive measures in a particular sector from us."

"But we cannot do it. First of all, because these restrictive measures have a response character, and, secondly, WTO rules do not allow us to do this, otherwise it will look like a selective approach.

Therefore, our position is that those who introduced these sanctions should begin. As for the political basis for their removal, it is a question of political dialogue. Naturally, we will carry it out, including in the Ukrainian issues, and in some other issues on which we are in constant contact.

Today it is obvious that we are wasting our forces on political confrontation. We offer specific proposals that would mutually strengthen our positions, formulate new approaches to interaction between the integration associations of the Eurasian Economic Union and the European Union. The Eurasian market today is more than 180 million people, a huge potential for the development of trade. We have already substantively worked on this subject with the Asia-Pacific region, with China, but we would like to hear – and I am asking you – a comprehensible position from European politicians and, of course, of European business on this subject. We believe that it is time to create relations on this level," Medvedev stated.

Another example of an project that is important and yet politicized is the 'Nord Stream-2' project.

“I participated in launching Nord Stream -1. The first two lines are working today at 70-percent capacity. The main thing is that there are no transit risks. We have also eliminated all the concerns about environmental security. The project has improved the energy security of Europe. Today Nord Stream-2 is on its way. However, unfortunately, just like in any other business, some countries are trying to artificially politicize the projects, even though we can see the interest of several countries in the second phase of the project. I have recently discussed the issue with the Prime Minister of Finland, with Austrian colleagues and other officials. We hope that a decision on the issue will be made; moreover, it is beneficial for German business and European business in general. I am sure that, for the audience, the answers to the majority of questions are obvious today.

I can see representatives of our closest partners here, major respected companies which are well-known in Russia. We have many joint projects in industry, energy, metallurgy, transport, chemistry, car engineering; and these are thousands of jobs in Germany and Russia. More than 5500 companies with a German share have a history of success on the Russian market, and cooperation is built both between major corporations and between small and medium-sized enterprises,” the Russian Premier reminded.

He admits that the Russian economy is passing through a difficult period of its development: “It is not easy for us, but we cope with it. Adaptation to drastically changed foreign conditions is taking place. Low oil prices are sensitive, but not critical, as we have a good factor of safety, a low national debt, and significant reserves. Despite all the circumstances, last year we had a surplus of the trade and foreign balance. Devaluation of the ruble exchange rate opened up new opportunities for accumulating export potential; and of course it is important to use the window of opportunities to change some situations, to change the structural imbalance in the economy. We also actively deal with import substitution. In some industries, including agriculture and the food industry, we can see good results. Russian farmers are ready to work in other directions. The longer sanctions are in force, the less chances Europe has of maintaining its positions on the Russian market as suppliers and investors. So you need to act quickly. We also hope for joint work with European companies in our market in the future. We will deal with the development of innovations and high technologies in the future. Apparently, processes have once been launched due to my initiative, including the project on modernization. We have good grounds for cooperation in car engineering, machinery engineering; we will be glad to continue the work with our German partners,” the head of the Russian government promised. 

The chairman of the Eastern Committee of the German Economy, Wolfgang Buchel, said that the interest of German and Russian business in the maintenance of bilateral contacts is very large: ‘‘according to the number of enterprises (5600), there is no other country except Germany that could be so strongly represented in Russia. Unfortunately, this high interest is not currently reflected in the trade statistics. In 2015, our bilateral trade turnover decreased by 25%. We had a record-breaking year in 2012, and thus German-Russian trade turnover fell from €80 billion up to €50 billion euros. And prospects for 2016 are quite pessimistic.

According to a survey among German entrepreneurs, 81% of German companies in Russia express negative forecasts in Russia. I still think that it's a positive moment that the majority of German companies rely on the Russian market, and believe in an economic recovery.

Low oil prices were mentioned by Büchel among the reasons for the crisis, as well as the depreciation of the ruble and the mutual trade sanctions: "In addition, structural problems in Russia also affect the situation... The agenda for modernization was the right answer to the need for reforms in Russia. We hope that this agenda will receive a new dynamic and it will be developed in the future. The reduction of state control and the fight against bureaucracy and encouragement of small and medium-sized enterprises in this regard would be a very important task, which is necessary to be dealt with, in our opinion. The policy of localization of production in Russia enjoys great attention from German business. German business is implemented with the help of investing on site in order to promote this work.

The current task is to increase the competitiveness of the Russian economy, but the economy will face difficulties without the new policy of relaxation in Europe, as well as without the settlement of the Ukrainian conflict. The cancellation of the sanctions is associated with the implementation of the Minsk agreements. That is the EU’s position. However, we observe the following situation now: Ukraine also doesn’t fulfill its obligations under the Minsk agreements. Therefore, we hope the process of lifting the sanctions will start at least in summer. Thus, we could achieve positive dynamics in international relations… Further preconditions on the implementation of the main points of the Minsk agreements are necessary to gradually remove sanctions, including a stable solution to the ceasefire and the access of OSCE observers to the entire territory of the conflict."

According to Büchel, German-Russian relations are characterized by a special quality for various reasons of an economic and political nature: "We focus on the beacon projects, for example, the Nord Stream 2. With the support of the federal government we are trying to convince skeptics within the EU ... Economic cooperation with Russia may decisively contribute to security, stability and peace in the world. Therefore, we support the establishment of a joint economic space from Lisbon to Vladivostok with a place for Ukraine. Ukraine should be a bridge to Russia, it shouldn’t become a dead end, and we would like to resume tripartite talks between Russia, the European Union and Ukraine. This is also important in order to hold constructive talks between the European Commission and the Eurasian Economic Commission ... I am convinced that this partnership will become a reality."