German Businesses Hurt by Sanctions Imposed Against Russia

An employee checks a steel pipe in the manufacturing hall at Vallourec and Mannesmann in Duesseldorf, Germany

An employee checks a steel pipe in the manufacturing hall at Vallourec and Mannesmann in Duesseldorf, Germany

© AP Photo/ dpa, Caroline Seidel

Economic Sentiment for Germany Lowest Since December 2012

MOSCOW, September 10 (RIA Novosti) – German medium-size businesses are starting to feel the negative impact of Western sanctions imposed against Moscow, as Russia is turning towards Asia-Pacific nations for high-tech machinery and engineering systems.

“The innovative German machinery makers and engineering companies, mostly medium and small businesses, are being hit the hardest,” Volker Treier, deputy managing director of the German Chambers of Commerce (DIHK) said, as quoted by the Business Insider Tuesday.

Treier said he expects German exports to Russia to fall by about 20 percent in 2014.

“On the one hand, they are being directly hurt by the sanctions imposed by the European Union or due to lacking clarity about how they should be implemented. On the other hand Russian firms that placed the orders are facing higher financing costs due to a credit crunch and ruble’s devaluation,” Treier explained.

On Tuesday, the German-Russian Foreign Chamber of Commerce (AHK) said that, based on a new survey of German businesses operating in Russia, the so-called Mittelstand companies (small-scale businesses that form the backbone of Germany’s economy) were being hit badly by the fallout from Western sanctions, particularly in the industrial manufacturing sector.

“China is the distinct beneficiary” of Europe’s sanctions policy toward Russia, AHK President Rainer Seele said, as quoted by The Wall Street Journal Tuesday.

Seele stressed that the Western sanctions are threatening long-standing economic ties between Germany and Russia.

Germany is Russia’s biggest trading partner in the European Union. According to the Business Insider, there are about 6,200 German firms active in Russia with 20 billion euros invested. Last year, Germany sold about 36 billion euros of goods to Russia which is almost a third of the European Union’s total, the Business Insider wrote Tuesday.

In view of the Western sanctions, Russian clients have started putting their European orders on hold, instead turning to China, South Korea or Japan for products like high-tech machinery and engineering systems.

On Monday, Russian Deputy Prime Minister Dmitry Rogozin announced that Russia and China plan on signing an agreement in October on a technical project for long-haul wide-bodied aircraft as a means to substitute foreign purchases.

Also on Monday, the European Union officially adopted a new round of sanctions against Russia, but delayed their implementation pending the assessment of the ceasefire regime agreed last week by Kiev authorities and Ukrainian independence supporters during the meeting of the Contact Group on Ukraine in Minsk.

A number of key Russian oil and defense industry companies and banks are expected to become subject to the new round of EU economic sanctions.

Brussels and Washington started to impose sanctions against Moscow following Crimea’s reunification with Russia in March, which the West considers illegal, and Russia claims to be fully legitimate. The latest round of restrictions has, in particular, limited the raising of capital in the European Union for a number of Russian banks. As a responsive measure, Moscow issued a one-year ban on the import of certain food products from the United States, the European Union, Australia, Canada and Norway.

In August 2014 the ZEW Indicator of Economic Sentiment for Germany declined dramatically, reaching its lowest level since December 2012.

In August 2014 the ZEW Indicator of Economic Sentiment for Germany declined dramatically, reaching its lowest level since December 2012.

MOSCOW, August 12 (RIA Novosti) – In August 2014 the ZEW Indicator of Economic Sentiment for Germany declined dramatically, reaching its lowest level since December 2012, the Center for European Economic Research said in a press release Tuesday.

“The decline in economic sentiment is likely connected to the ongoing geopolitical tensions that have affected the German economy by now. In particular, current figures on industrial production and incoming orders suggest markedly reduced investment activities on the part of German firms against the backdrop of uncertain sales prospects,” the press release said.

According to the data, the ZEW Indicator is currently 8.6 points, as opposed to its long-term average of 24.6 points. The August decline of 18.5 points is the largest drop since June 2012.

The document states that the ZEW Indicator of Economic Sentiment for the Eurozone has also declined this August, losing 24.4 points from July, now at 23.7 points.

The ZEW indicator calculates the difference between the share of analysts that are optimistic and those that are pessimistic about the expected economic development of a country over the next six months. The indicator is calculated for Germany, Japan, the United Kingdom, the United States and the Eurozone.

Putin, Hollande Discuss Ways to Assist Political Settlement in Ukraine

Russian President Vladimir Putin

Russian President Vladimir Putin

© RIA Novosti. Aleksey Nikolsky

MOSCOW, August 29 (RIA Novosti) – The presidents of Russia and France discussed ways to assist peaceful settlement in Ukraine in a phone conversation in the run-up to the European Council meeting due Saturday, the Kremlin said Friday.

“Ways of possible assistance to political settlement of the internal Ukrainian conflict were discussed,” the Kremlin press service said in a statement. “Both sides stressed the need to end bloodshed, tackle the humanitarian catastrophe and solve the problems solely by peaceful political means.”

Vladimir Putin and Francois Hollande agreed to continue contacts in the bilateral and multilateral formats, according to the Kremlin.

Since mid-April, Kiev has been conducting a military operation against the southeastern regions of Ukraine that refused to recognize the legitimacy of the new government after a February coup.

Moscow has repeatedly condemned Kiev’s military campaign against independence supporters in the east of the country and urged for an immediate stop to the punitive operation, advocating a peaceful resolution to the crisis.

Over 2,500 people, including the victims of the Malaysia Airlines flight MH17 crash, have been killed and more than 6,000 injured since the start of Kiev’s military operation against the militias in eastern Ukraine in mid-April, according to the United Nations.