Last updated in March 2017
Russia’s annexation of Crimea in contravention of international law and its actions in eastern Ukraine overshadow German-Russian relations as well as Russia’s relations with the European Union and other Western partners. In response to Russia’s actions, the EU has imposed incremental sanctions on the country (asset freezes and travel bans on individuals and companies as well as sectoral economic and financial sanctions). At the same time, the Federal Government has repeatedly made it clear that the door to a dialogue with Russia remains open and that it actively and emphatically supports efforts to resolve the conflict in eastern Ukraine. Germany and France in particular have, at the most senior level, pressed for observance of the September 2014 Minsk agreements. At a summit attended by Germany, France, Russia and Ukraine in Minsk on 12 February 2015, a package of measures for the implementation of the Minsk agreements was adopted.
As a result of the low price of oil, its insufficiently diverse economy and the effect of Western economic sanctions, Russia has faced an economic crisis in recent years to which it has responded with a policy of localisation and import substitutions. The renewed increase in oil prices since autumn 2016 has lessened Russia’s economic downturn.
As a result of the economic crisis, German exports to Russia dropped by 26% in 2015 compared to the previous year to 21.8 billion euros. Between January and November 2016, the decrease slowed considerably to only -0.8% compared to 2015. Bilateral trade has fallen since 2012 from 80 billion euros to 47 billion euros from January to November 2016. Russia’s principal exports to Germany are raw materials, in particular oil and natural gas, as well as metal goods and petrochemical products. Germany’s main exports to Russia are mechanical engineering products, motor vehicles and vehicle parts, chemical products, food and agricultural produce.
Despite the crisis, some 5200 companies with German capital investment have stayed in Russia and are preparing for the economy to pick up again. The relatively weak rouble and drops in wage costs are currently helping to make the Russian market more attractive. Many companies have remained in the hope of recouping the losses they made due to the crisis. In 2016, there were signs of a slight upturn in German-Russian trade relations, including German direct investment in Russia which increased to 2.2 billion US dollars in the first half of the year. Many regions in Russia, for example the Republic of Tatarstan and the Kaluga Region, are actively seeking to attract foreign investment. Incentives are being offered, ranging from the creation of industrial parks and special economic zones to the provision of land, buildings, transport infrastructure and connections to customs and tax concessions and cutting red tape. German companies are concerned about the political climate in Russia, the country’s economic development and protectionist tendencies that continue despite Russia’s accession to the World Trade Organization also given Russia’s localisation policy and that negatively influence foreign companies.
Quite apart from this, doing business in Russia requires circumspection and careful consultation on account of the country’s many idiosyncrasies. Customs clearance, certification and administrative procedures often still prove difficult.
Culture and education
There is a lively exchange between Germany and Russia in the cultural and education sectors. Following the bilateral German-Russian Year of Education, Science and Innovation 2011/2012 and the Year of Germany in Russia/Year of Russia in Germany 2012/2013, crossover years of language and literature, featuring numerous events, were held in Germany and Russia in 2014 and 2015. This led to a further intensification of exchange between the two countries at the level of civil society. Finally, a joint German-Russian youth exchange year was officially launched in June 2016. The aim is to promote German-Russian youth exchange and foster direct dialogue between young people in the two countries through a host of events and encounters.
With some 1.5 million learners, 1.1 million of them school pupils, German occupies an undisputed second place in foreign language teaching in Russia, after English. As part of the Schools: Partners for the Future initiative (PASCH), more than 100 schools receive support to build and develop their German teaching. Here, there is close cooperation between the Central Agency for Schools Abroad and the Goethe-Institut.
The Goethe-Institut organises a wide spectrum of cultural events and offers a comprehensive range of language courses in Russia, as well as boasting a wide network of partners in Russia’s provinces.
In the keynote speech he gave at the Ural Federal University in Ekaterinburg in December 2014 and most recently at an event with students of the same university in August 2016, Federal Foreign Minister Steinmeier emphasised that the two countries had built a good foundation for academic relations and called for efforts to further expand cooperation in this area. There are currently more than 880 partnerships between higher education institutions in the two countries. In the past year alone, there were more than 15,000 Russians studying in Germany, nearly one in ten of them on a German Academic Exchange Service (DAAD) scholarship. Over 1700 German DAAD scholarship holders have gained experience at universities and research institutions in Russia. There are a number of lectors funded by the DAAD and the Robert Bosch Stiftung working at Russian universities.
The German-Russian Institute of Advanced Technology was opened at the Kazan National Research Technological University in September 2014. At this institute, Russian engineering students are taught according to German standards. The first students graduated from the institute in summer 2016.
The Federal Government strongly supports efforts to step up school and youth exchange with Russia. To this end, in 2006 it launched the Hamburg-based German-Russian Youth Exchange Foundation together with other partners. So far, nearly 100,000 young people from both countries have participated in the projects it has conducted, the annual highlight being the German-Russian Youth Parliament, which met most recently in November 2015 in Moscow. The German-Russian youth exchange year began in June 2016 under the motto “70 Years After the End of the Second World War – Youth Exchange – Understanding – A Common Future”.
The Federal Government promotes efforts to preserve the cultural identity of the German minority in Russia (numbering approximately 400,000). The work includes language and education as well as social, community-support and other cultural projects.