Little Love for Sanctions - Ukraine Crisis A Tightrope Walk for German Businesses
By SPIEGEL Staff
As Moscow continues to escalate the situation in Ukraine, public and political pressure is turning against German companies who do business with Russia. The countries' economic ties make disengagement next to impossible.
Clemens Tönnies usually says what he thinks. When, on a February morning, he climbed into a private jet with his wife Margit to fly to the Olympic Games in Sochi, he described his views on Russia to a reporter with Sport Bild magazine: It has "bothered him, how negatively this country has been portrayed."
Tönnies, a meat factory owner from Rheda, Germany, likes to spend a lot of time surrounded by Russian friends and partners -- and his three-day stay at the Olympics was no exception. There, he met multibillionaire Oleg Deripaska in his skybox at an ice hockey game, and was invited to a mountain hotel by Sberbank head and former Russian Economics and Trade Minister German Gref. Although he wasn't able to meet with Russian President Vladimir Putin and Gazprom Chef Alexey Miller during his Russian sojourn, he did receive phone calls from the head of a German-Russian gas pipeline consortium and former Chancellor Gerhard Schröder and met with Marcus Höfl, the husband of German ski star Maria Höfl-Riesch and the long-time manager of Franz Beckenbauer. The president emeritus of the Bayern Munich Football Club is part of the network of Russia supporters -- he promotes sporting events in Russia and is paid for it by the Russian Gas Society.
But in the past few days, Tönnies has become noticeably quieter about his support of Russia. The likely reason: He had candidly told the Handelsblatt business newspaper in an interview that the Russian president had invited the players of FC Schalke 04, a traditional football club, to the Kremlin. Tönnies is the chairman of the club's supervisory board, which also has Russian state company Gazprom as its main sponsor. "We are sports people, and not global politicians," he said in response to critics of his travel plans in the midst of the Crimean crisis. This, in turn, created a storm of outrage, especially in the political world.
"To accept an invitation to the Kremlin in the current situation and allow oneself to be instrumentalized in this manner doesn't really show any tact," declared Peter Tauber, the general secretary of the conservative Christian Democrats. Others spoke of a "minion's visit to an autocrat," and argued that Tönnies has put the club in "the service of Putin's political propaganda." The fact that the interview was conducted in early April, and that the invitation was given in the fall and had been known about for a while, seemed irrelevant. Just one day after the publication of the interview, Tönnies announced that there were no current or future plans for a trip.
Businesspeople Oppose Sanctions
Given the ways business-world figures and politicians have been audibly grumbling at each other for weeks whenever the issue of how to deal with Russia in regards to the escalation in the Ukraine arises, the hubbub isn't exactly surprising.
On March 21, the EU heads of state and government declared that all Russian steps aiming to further destabilize Ukraine would "lead to additional and far-reaching consequences" -- meaning strict economic sanctions. But Russia has ignored agreements and arrangements and, thus far, not much has happened in terms of consequences -- creating a dilemma for both politicians and businesspeople.
Although all sides argue that international law is more important than profits, politicians appear to be having a difficult time agreeing to far-reaching and painful sanctions, given Europe's energy dependence on Russia. The business community, it's also clear, has no interest in such punitive measures.
At the East Forum in Berlin in April, Eckhard Cordes, chairman of the Committee on Eastern European Economic Relations, an organization representing German business interests in the east, received applause for one sentence in particular. "We won't let the constructive work of the last decades be ruined for us," he said in reference to the threatened sanctions, and called for politicians to solve the crisis at the negotiating table as quickly as possible.
Cordes seems to be voicing the feelings of many German businesspeople. Germany, after all, has noticeably closer connections to Russia than other European countries -- last year's trade volume was €76.5 billion ($106 billion), and Germany is Moscow's third-largest trading partner. The Germans export machinery, electrical equipment and cars to Russia, and import gas and oil in return. There are 6,000 German companies in Moscow -- more than all those from all the other EU states combined. The Russian market, as difficult as it may be, is giant and lucrative.
A Delicate Path
In the current political situation, finding the path forward is a high-wire act -- a fact that nobody understands better than business people whose companies have been involved in the farthese reaches of Eastern Europe for several years.
Joe Kaeser was the first to discover how easily carefully crafted bonds can be ripped apart. In late March, the head of German multinational engineering giant Siemens met not only with Putin, but also with the head of the Russian national railway, Vladimir Yakunin, who is on the American sanctions list. After Kaeser commended his "trusted relationship" to Russian businesses, it didn't take long for him to be heavily criticized back at home for only caring "about money." Rüdiger Grube, the head of Deutsche Bahn, the German national railroad, decided to cancel his planned trip to Russia for the time being.
As comprehensible as these reactions may be, isn't it also understandable that businesses try to represent their own interests, even during politically difficult times? And can't that be a legitimate way of doing things -- at least until politicians build a clear framework of sanctions or other measures?
The reactions do seem a little sanctimonious. Business with Russia has never been simple, and definitely never unpolitical. Even before the beginnings of the current conflict, the Russian government wasn't known for its implementation of democracy and civil rights. Up until now, the issue was silently tolerated, because both sides were making profits.
Gazprom: A Complex Giant
But the relationship has been ambivalent all along. There's no better example of this than Gazprom, the largest gas company in the world, half of which belongs to the Russian state. Gazprom is often used by the state to exert pressure in international crises. The company owns television stations and newspapers and feeds Russia's coffers with its profits. And not only the Russians'. If you consider the profits Gazprom provides to German businesses, the outrage over Schalke's football players' €15 million-per-season sponsorship is almost pathetic.
The biggest profiteer and most zealous ally in political and economic conflicts is the German chemical giant BASF, or, more specifically, its Wintershallsubsidiary. The company does billions of euros in business in Russia, and has ownership shares in giant Russian gas fields. In return, the company has provided Gazprom with access to the German gas network and storage facilities.
It wasn't until a rapidly called press conference last Thursday that Wintershall head Rainer Seele positioned himself as an advocate of the Russian energy multinational. He then let loose statements like: "The Russians are dependable allies," "embargoes don't do anything for anyone" and "we shouldn't frivolously be putting years of built-up trust in jeopardy."
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