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Russian Federation: Bilateral Relations to Germany Russian Federation

13.02.2019 - Article

Politics

German‑Russian relations, as well as Russia’s relations with the European Union and other Western partners, have been overshadowed by Russia’s annexation of Crimea in contravention of international law, Russia’s actions in eastern Ukraine and in Syria, Russian conduct in connection with the nerve gas attack on Sergei and Yulia Skripal in Salisbury in March 2018, cyber attacks in Germany attributed to Russian sources, the Russian stance on the Assad regime’s use of chemical weapons in Syria and Russia’s violation of the INF Treaty. In response to Russia’s actions in Ukraine, 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). On the initiative of Germany, the EU tightened sanctions further in early August 2017 after four gas turbines were transported to Crimea in breach of contract with Siemens. Reacting to the Skripal case, the German Government, following consultation with partner countries in the EU and NATO, declared four Russian diplomats as persona non grata requiring them to leave Germany in late March 2018; the EU has now imposed sanctions on four individuals in connection with the newly created horizontal regime of measures to address the use and proliferation of chemical weapons.

At the same time, the German 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 are, at the most senior level in the form of the Normandy format, pressing for observance of the September 2014 Minsk agreements and the catalogue of measures designed to implement it agreed on 12 February 2015. Despite tension in relations with Russia, the joint German‑Russian years focusing on a particular theme are creating positive momentum in bilateral relations between the two countries.

Economy

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. Russian GDP resumed modest growth in 2017 and 2018 (1.5 percent and 1.8 percent respectively).

Bilateral trade between the two countries declined by approximately 40 percent between 2013 and 2016. 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. In 2017, bilateral trade recovered considerably, its volume increasing by approximately 20 percent; in 2018 the growth in bilateral trade slowed. 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 5000 of the original number of more than 6000 companies with German equity participation remain active in Russia. German direct investment in Russia showed a positive balance in 2017. 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. Although Russia remains a market with vast potential given its wealth of resources, the lack of reforms remains a major stumbling block for Russia’s economy. Furthermore, Russia’s policy of localisation and import substitution makes access to the Russian market for foreign companies dependent on comprehensive relocation of production facilities to Russia. This creates risks and uncertainties which make it more difficult to do business in the country.

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 Municipal and Regional Partnerships (2017/2018), the German-Russian Year of Universities and Science runs until mid‑2020. The aim is to make people more aware of German‑Russian cooperation in the sphere of universities and science and to win their support for the expansion of this cooperation.  In addition to this, Russia is holding the Russian Cultural Season in Germany this year to showcase Russian culture in more than 300 cultural events in many cities around the country.

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. There are approximately 1000 school partnerships between German and Russian schools. As part of the Schools: Partners for the Future initiative (PASCH), more than 100 schools receive support to build and develop their German teaching. The Central Agency for Schools Abroad (ZfA) and the Goethe‑Institut cooperate closely to this end.

The Goethe‑Institut has three branch offices in Russia (in Moscow, St Petersburg and Novosibirsk). It organises a wide spectrum of cultural events and offers a comprehensive range of language courses, as well as boasting a wide network of partners in Russia’s provinces. The ZfA has four German language advisers and more than 40 seconded teachers in Russia.

There are currently around 900 partnerships between higher education institutions in the two countries. On average, more than 15,000 Russian nationals study in Germany, nearly one in ten of them on a German Academic Exchange Service (DAAD) scholarship. The DAAD has a branch office in Moscow and Information Centres in St Petersburg, Novosibirsk and Kazan. Each year, up to 2000 German DAAD scholarship holders gain experience at universities and research institutions in Russia. There are 34 DAAD lectors and seven DAAD German language assistants working at various Russian universities.

The German 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. Each year, more than 15,000 young people from both countries participate in its projects. A regular highlight is the German‑Russian Youth Parliament.

The German 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.

Disclaimer:

This text is intended as a source of basic information. It is regularly updated. No liability can be accepted for the accuracy or completeness of its Contents.

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