German economy bets on Russia

German economy bets on Russia

Wind blows, it's cold in St. Petersburg. Military orchestra plays German and Russian national anthems. Sigmar Gabriel lays a wreath at the memorial to victims of the German blockade of Leningrad during the Second World War. After that there will be a tour through the lower floor, followed by another tour through the magnificent Tsarist era halls of the Hermitage and, finally, a cruise along the Neva. That's how Spiegel describes the visit of German Foreign Minister to Russia in an article "Dinner mit einem alten Bekannten".

His visit to St. Petersburg will last about 19 hours. There's a warm weather in Berlin, while it's just eight degrees in St. Petersburg. Program of the visit includes not only short tours. Late in the evening on Friday, Gabriel met Russian President Vladimir Putin at his residence, where they held a private conversation. For several hours they discussed situation in the world, the conflicts in Ukraine and in Syria. After that they had a dinner and a cultural program. A good acquaintance of both politicians was also present - former Chancellor Gerhard Schröder, currently executive director of the Nord Stream II gas pipeline operator - a company, in which Russia's Gazprom is sole shareholder. 

Gabriel's visit to St. Petersburg should also help to establish ties with German economy. On Saturday morning, politician from Social Democrats met with German businessmen in his hotel - the Eastern Committee of German economy lobbied this meeting. These days German economy is widely represented at the annual St. Petersburg International Economic Forum. German entrepreneurs have been hoping to abolish EU sanctions against Russia for a long time. But Gabriel can't say anything fundamentally new. "The problem is that when any conflict exists for many years, it's difficult to get out of it," he said after a meeting with representatives of business circles, attended by Russian Economy Minister. Ukraine was also discussed with Putin the day before. Minister noted that he can't say that thay achieved a "huge breakthrough". That's what he "expected". Gabriel believes that the "Norman format" working group, which includes Russia, Ukraine, Germany and France and has been looking for ways to resolve the crisis in Ukraine for the past three years, was used once again after a long time.

German economy has high hopes for Russia

Indian Prime Minister Narendra Modi is called the main star guest of the "Russian Davos" by the organizers, but German language is the one dominates corridors of the forum along with Russian. Company-manufacturer of construction materials Knauf signs contracts on construction of a new roofing factory in the suburbs of St. Petersburg.

President of Siemens Roland Busch signs contract with Russian truck manufacturer Kamaz. Gerhard Schröder talks about his favorite topic: the expansion of Nord Stream gas pipeline. You can find copies of newspaper with interview of German ambassador to Moscow in the exhibition halls. Its title: "Together we will overcome all obstacles".

The main theme of the forum is: "What economic reforms does the country need?". "Russia must be part of the international division of labor," says former Finance Minister Alexei Kudrin, who is close to Putin. In case of Volkswagen, there is already some clarity as to how this might look. When factory in India was unable to produce enough Polo cars for the export last year, a plant in Kaluga, Russia, came to rescue - cars were sent by ships to Mexico.

After two years of crisis the mood of German companies in Russia has become much more relaxed. Despite weak economic growth, German-Russian trade turnover is growing significantly: plus 43% in the first months of this year. German-Russian Chamber of Commerce carried out a survey among its members: 63% expect the growth of revenues in 2017, 40% plan to hire more employees.

Ruble drop as a result of collapse in oil prices reduced the cost of production in Russia. "Wages in Russia are as low as in China," head of German-Russian Chamber of Commerce, Matthias Schepp, said. "The population is more qualified than in other BRICS countries. It becomes clear in St. Petersburg that German economy is betting on Russia," he added.