For German companies, ties with Russia are personal, not just financial

BERLIN — When Peter Fenkl heard that Russia had invaded Ukraine, he said his first thoughts were not for the business his German company...


BERLIN — When Peter Fenkl heard that Russia had invaded Ukraine, he said his first thoughts were not for the business his German company might lose in either country, but for the plight of its employees in the region, who over years of business relationships and shared drinks had become more than just colleagues.

“These are more than just business relationships, they are real friendships,” said Mr. Fenkl, the managing director of the company, a manufacturer of industrial fans. “We sat side by side in meetings, drank beers together.”

The family business, Ziehl-Abegg, has 4,300 employees, and Mr. Fenkl recalled how teams in Germany, Russia and Ukraine worked side by side, on business trips and at trade fairs where Ziehl -Abegg exhibited his wares. .

Today, the company’s four employees in Ukraine took up arms to defend their country. In Russia, where the company has a production site and employs 30 people, activity is at a standstill.

Mr. Fenkl said he spoke with the manager of his company in Russia several times over the past week, trying to figure out how to proceed as the gravity of the situation became clearer.

“I called the colleague in Russia twice and he couldn’t speak,” Fenkl added. “He kept bursting into tears.”

German companies do far more business in Russia than any other country in the European Union, exporting goods worth more than 26 billion euros ($28.4 billion) a year last (Poland was second with 8 billion euros) and investing an additional 25 billion euros in their operations there. This commitment to the Russian economy reflects, in part, a philosophy adopted by the former West Germany at the end of the Second World War, namely that trade could ensure peace and prevent Europe from sinking into another war.

Russia’s annexation of Crimea in 2014 and subsequent sanctions caused the number of German companies investing in Russia to drop by a third. Yet the figure was just under 4,000 companies in 2020, many of whom believed their presence could help anchor Russia in the democratic sphere.

On February 24, that belief was shattered, leaving businesses of all sizes wondering what to do next.

While some have announced their decision to step down and have begun to untie business ties, others are trying to stay, some out of loyalty to their employees, despite Western sanctions that have significantly hampered cross-border banking and transport, and l collapse of the ruble. What remains for many companies is a deep sense of sadness, coupled with disillusionment.

The main German automakers – BMW, volkswagen, Mercedes-Benz and Daimler Truck – all announced last week that they were stopping their exports and production in Russia. Family businesses, including ZF Group, an auto parts maker, and Haniel, which runs several independent businesses in the country, are doing the same.

“While our options are limited, we can still have an impact,” said Thomas Schmidt, chief executive of Haniel, in a video statement, announcing that all business activities in Russia and Belarus would be halted and engagements would be canceled. “I understand it’s difficult from a customer and supplier relationship perspective, but it’s more important that we get people to protest in the streets.”

That sentiment even comes from the East German Business Association, a business group that for decades has encouraged closer economic ties with Moscow, even in the face of increasingly undemocratic measures by President Vladimir V. Putin. The group celebrates its 70th anniversary this year and several of its members were previously due to meet the Russian president in Moscow last week. The voyage was abandoned after the invasion.

“We should call a spade a spade: it is currently less about sanctions and their consequences and more about whether or not we will still have meaningful economic relations with Russia in the future,” said Oliver Hermes. , president of the trade organization. . In 2014, the group campaigned against tough economic sanctions on Moscow, but this time is different.

“The sooner the Russian government stops this war, the more these relations can still be salvaged,” Mr. Hermes said. “There is no doubt that the German economy will support the imposed sanctions.”

Years ago, Martin Daller, the managing director of Seebacher, a maker of specialist lighting controls, hadn’t been interested in investing in Russia. But it’s a huge and attractive market for the products developed by his family business, based in Bad-Tölz, and when a Russian executive left a competing company and approached it to create a Russian division, he decided to give it a try.

That was just before the outbreak of the coronavirus pandemic, but business was starting to pick up this year. Then came the invasion.

“Now we wonder what we should do. Cut the contact and let him go, ”said Mr Daller, whose company has an annual turnover of 2.5 million euros. “From a financial point of view, it wouldn’t be so dramatic for us. But he is the father of three children and the whole family depends on his work.

It’s not just small businesses that face tough decisions.

Wintershall Dea, a German oil and gas company with a global portfolio of projects, has canceled its annual press conference which was due to be held on February 25, the day after the invasion. Instead, its leaders issued a joint statement on March 2 expressing concern about the war.

“We have been working in Russia for more than 30 years. Many of our colleagues at our other sites also work daily with Russian partners,” it read. “We have many personal relationships, including in our joint ventures with Gazprom,” the Russian energy giant.

“But the Russian war of aggression against Ukraine marks a turning point,” they said. “What is happening now is shaking the very foundations of our cooperation.”

the company reported separately that it would stop payments to Russia and cancel its €1 billion investment in the ill-fated Nord Stream 2 gas pipeline linking Russia and Germany, that the government in Berlin had suspended February 22. It will also receive no income from its oil and gas operations in Russia, which accounted for almost a fifth of its operating profit in 2021.

Not all German companies are withdrawing. Metro, a wholesale food company with 93 locations in Russia, where it had a turnover of 2.4 billion euros last year, said it had decided to continue operations for fear that the withdrawal does not disrupt the food supply of the population. “None of our 10,000 employees in Russia is personally responsible for the war in Ukraine,” the company said in a statement.

Metro said it was also trying to operate some of its 26 stores in Ukraine, depending on the security situation, and supporting efforts to provide for people who have been forced to flee their homes.

Beyond the impact on companies that had invested in Russia, analysts predict that the German economy as a whole will be hit by increases in energy and food prices as a result of the war. Since the invasion, politicians have rallied the public to see their sacrifices from a broader perspective.

“My country, Germany, will be the country that will bear the brunt of the sanctions that have been adopted by the European Union and by the United States,” said Emily Haber, German Ambassador to the United States. said on Twitter. “We are ready to bear the burden. Freedom has no price.”



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Newsrust - US Top News: For German companies, ties with Russia are personal, not just financial
For German companies, ties with Russia are personal, not just financial
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