The overall success of Merkel’s trip raised hopes that Russia and Germany will further stick together on global finance issues at the forthcoming G-20 summit in St. Petersburg in September.
Merkel in Russia and “looted art”
Angela Merkel’s visit to the St. Petersburg International Economic Forum (SPIEF) was more effective than Vladimir Putin’s to the Hannover Fair last April. Putin’s visit was overshadowed by protests from German NGOs and negative media reports and ended without concrete results. Merkel’s visit brought together a numerous CEOs from both countries to discuss concrete business projects. Merkel delivered an interesting speech to the SPIEF in which she outlined her policy in saving the Euro-Zone. Participants of the talks in St. Petersburg maintained that the meeting was the best over the last couple of years. With regard to global finance crisis management in the G-8, Russia and Germany have more in common than the Germany and the U.S.
Merkel’s visit was almost spoilt by German media reports about the so-called looted art – assets of culture and art which Soviet soldiers have taken home from the Soviet-occupied part of Eastern Germany after World War II. After Germany was reunited in 1990, the German government asked Russia to return the “stolen art” to its national museums. The Russian side was reluctant to meet the request.
The German media reported the day when Merkel arrived in St. Petersburg that the Chancellor had decided to cut shot her visit because Putin had prevented her from giving a speech on the return of looted art during the opening of a German-Russian historical exhibition at the Hermitage museum. But the manufactured scandal was avoided. Putin and Merkel went to the exhibition. Both state leaders spoke in the Hermitage museum, but Merkel was sensible enough not to dramatize the issue of looted art during the museum visit which, instantly, coincided with the anniversary of Nazi Germany’s invasion of the Soviet Union.
The overall success of Merkel’s trip raised hopes that Russia and Germany will further stick together on global finance issues at the forthcoming G-20 summit in St. Petersburg in September.
New trade record
Russian-German trade has hit a record high of $80 billion, a sign that both countries have enlarged their economic ties. One should, however, note that Germany’s trade volume with Chinese is double as higher as with Russia. But the German-Russian economic cooperation trend is positive. Russian businessmen are not simply bunkering their fortunes in German banks (as they did before), but show increased interest in investing in the German market. Russian companies started to “go global” and the German side has particularly noticed the interest of Russian private enterprises to seek for partners among the German middle-range business. German firms continue to view the Russian market with interest. Bigger companies have acquired new assets in the automobile and energy sector.
The sincere hope of German business is that Russia will seriously restructure its economy, modernize its infrastructure and focus less on energy exports. The oil and gas dependency of the Russian economy is a serious burden for the country. According to German business experts, too little has been achieved in Russia in that field.
The Russian-German Chamber of Foreign Commerce has launched an initiative in support of the small and medium-sized enterprises (SME) in Russia. By helping to reshape the operational framework of the SME in Russia, Germany wants to create better conditions for the functioning of German middle-range business in Russia, too. The initiative also offers support for Russian SMEs in their expansion to the German and European market.
Germany reminds Russia, that its business has achieved better results with China because of the success of cooperation between both state companies and medium-sized businesses. German business wants the same positive results with Russia as with China. China has overtaken Germany as Russia’s number one trade partner, but Germany will try to regain the pole position.
Germany saves EU
Speaking at SPIEF, Angela Merkel rejected the idea to create a United States of Europe, which has been discussed for two or three years. Due to diversities among national states inside the EU that goal seems not realistic.
Europe is being torn apart by numerous controversies over how to overcome its crisis. Actually, Germany is the only country advocating austerity. Other Europeans are trying to convince Germany to support an increase in public investment or even money printing (which Merkel has rejected). Although the decision was made to create the position of European finance minister and to bolster Brussels with additional powers to manage EU financial flows and monetary policy, the European Union has not moved forward in radically reforming its structures.
Indicatively, it was Putin who defended Germany’s position at the G8 summit against America which, has been urging increased spending as the way to deal with the financial crisis. In light of this, it would be interesting to see if Russia and Germany manage to forge a common position for the upcoming G20 summit, where other important countries, including China and India, will have a chance to express their points of view on the organization of the world financial system. Russia, which has learned how to save money during the past 13 years, and Germany, which is reluctant to leave billions of dollars in debt to the next generation share similar views on how to act in the present crisis.
How close are the countries’ positions on Syria?
Russia rejected a tough UN-resolution on Syria, while France, the UK, and the US have urged a hard-hitting UN resolution and have agreed to supply the Syrian opposition fighters with modern weapons. Germany abstained on this issue, similar as in the case of Libya. Germany urged the conflicting sides in Syria to stop the civil war, but spoke out against any military intervention from outside. Instead of supplying rebels with weapons, Germany spoke out in favor of supporting them with non-lethal equipment. Germany has a vested interest in the US- and Russian-sponsored Geneva conference on Syria.
The Syrian civil war is not anywhere close to an end and everyone understands that it is on the verge of spilling over Syria’s borders in a very perilous geopolitical environment. Just one spark could ignite Iran, Israel, Jordan, Lebanon and even Turkey or Egypt, countries that could be destabilized in a matter of hours.
Russia also has a vested interest in stopping the conflict and is trying to dissuade the West from its uncompromising position that Bashar al-Assad must go (regime change). Assad, in all likelihood, will send his ministers to the negotiating table with the rebels in Geneva, thus providing Russia with a diplomatic success. The problem is whether the West is able to get true representatives of the opposition forces to sit at the same table.
It is not true, as often pointed out in the West, that Russia always behaves as a veto-power, rejecting all initiatives coming from the U.S. and EU. Russia never denounced the French military operation against terrorists in Mali and made no attempts to confront the West in Egypt. Moreover, Moscow shares the same fears concerning militant Islamist forces as the U.S. and the EU. In reality, Russia had offered the West a common agenda on fighting Islamic extremism since the attacks on 9/11. A more fruitful cooperation between Russia and the West on Iran (after the departure of Akhmadinedzhad), Syria (if the Geneva conference comes true), Egypt and especially Afghanistan (after the departure of NATO troops from that country) is realistic. Both sides need the political will to stop the Cold War rhetoric of the past months and focus on the real threats of mankind.
Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.