German Investment Into Russia Highest For Past Ten Years

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Making a mockery of the EU sanctions upon Russia, German businesses invested more than €3.3 billion ($3.7 billion) into Russia in 2018, reaching the highest levels in a decade and exceeding numbers not seen since Russia’s annexation of Crimea in 2014, according to data from the Russia-German Chamber of Commerce. German investment into Russia had increased by 20% the previous year illustrating the opportunities that remain in Russia for foreign investors.

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German corporates are not alone in increasing their cooperation with Russian firms. Bilateral trade between France and Russia grew by 11% to $17 billion last year and French firms currently have $20 billion invested in Russia. The French energy company Total recently acquired a 10% stake in a $21 billion gas project in Russia’s Arctic, in addition to its existing 20% stake in a neighboring $28 billion gas project in the region, while Gazprom’s Nord Stream 2 offshore gas pipeline between Russia and Germany is receiving funding from French and German corporates Engie, Uniper and Wintershall, each of which is providing the project with €950 million ($1 billion) despite the project being threatened with U.S. sanctions.

These growing corporate ties between Paris, Berlin and Moscow suggest a ‘two-track’ approach to relations with Russia. While France and Germany remain committed to keeping Russia in check politically, friendly corporate relations between the countries are also being encouraged.

The EU demand for Russian products puts it into a trade deficit with the country, with Russia selling US$83 billion more goods and services to the EU each year than the EU sells to it. Despite this, sanctions are still estimated to have cost businesses within the EU about US$240 billion in lost trade opportunities. Russia is increasing its trade ties with China, and other countries in Asia to compensate, while EU countries are currently facing the possibility of recession. The European country Serbia has just announced it intends to sign off a Free Trade Agreement with the Moscow backed Eurasian Economic Union rather than continue to lobby for European Union membership, a telling pointer for future trade ties with the east becoming a preferred choice.

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