Rebuilding Syria

BERLIN/DAMASCUS (Own report) – German companies are seeking to favorably position themselves for participation in Syria’s post-war reconstruction. Following the Damascus International Fair, which closed yesterday, the director of the Middle East Department of the German Chambers of Industry and Commerce (DIHK) noted, the development in the country is being “closely observed” and “a series of cautious initial inquiries” are already being registered. The Damascus International Fair is one of the most traditional fairs in the region and was held again, for the first time, since the beginning of the war. Particularly companies from Russia, Iran and China have good prospects for participating in Syria’s rebuilding. Since 2012, the German government has been eager to provide emergency aid and reconstruction. However, this aid was restricted to regions under insurgent control. Idlib Province, today controlled by the al-Qaeda offshoot al-Nusra (renamed Tahrir al-Sham) is one of those regions benefiting.

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The Sanctions Debate

BERLIN/MOSCOW (Own report) – In the prelude to Chancellor Merkel’s visit to Russia, German business associations and foreign policy experts are urging that the policy of sanctions be ended. They argue that sanctions practically have become ineffective, since Russia’s economy has withstood these trade restrictions and is now even recovering. The boycott has also damaged the EU’s image and that of the USA in Russia and, even though intended to weaken, it has helped to stabilize the Russian government. Moreover, Russian orders, that German businesses had once expected, were increasingly going to competitors, for example in China – and are ultimately lost. However, German economists still see Russia as a lucrative market. According to an analysis by the Bertelsmann Foundation and Munich’s ifo Institute, a free-trade agreement between the EU and the Eurasian Economic Union (EAEU), congregated around Russia, would generate a growth of 45 billion euros. Government advisors recommend that the sanctions policy be gradually ended. This would not eliminate the prospect that Moscow, at any time, could be forced to its knees with an arms race. Continue reading

Reversal of Trend in Business with Russia

BERLIN/MOSCOW (Own report) – German business circles are discerning a clear reversal of trend in business with Russia, despite the EU’s alleged prolongation of sanctions against Moscow. In the third quarter of 2016, German exports to Russia have increased for the first time since sanctions were imposed. German investments in Russia are again growing already reaching a volume of two billion Euros this year. The Daimler Group, for example, is currently planning to construct a plant worth 300 million Euros near Moscow. The gradual growth in business relations is flanked by negotiations at the state secretary level, with the preliminary groundwork being laid by leading think tanks. However, that President-elect Donald Trump, who, together with his designated Foreign Minister, ExxonMobil CEO Rex Tillerson, intends to change course and cooperate more closely with Russia, at least on a punctual basis, is not seen very favorably from the German perspective. It would undermine the traditional division of labor among western countries in relationship to Russia that had been to Germany’s advantage. While Washington was usually exerting massive pressure on Moscow, Berlin could often assume an advantageous mediator role – with a consensus on exerting pressure on Moscow to submit to western policy, while enhancing its own business relations. Continue reading

A New Era in the Middle East (II)

TEHERAN/HANOVER/MUNICH (Own report) – Now that the sanctions are coming to a close, German enterprises are initiating major investments in Iran and multibillion-dollar gas deals with Teheran. Over the past few weeks, several business delegations have already visited Iran. The state of Bavaria will soon open a business representation in the Iranian capital. On the one hand, German business circles have their eye on the Middle East market, because Iran “is the ventricle of an economic zone comprising a cross-border population of 400 million people.” With car sales in Iran, Volkswagen would like to compensate for the slump it is suffering on other major markets, particularly China and Brazil. On the other hand, Berlin and Brussels are trying to acquire access to Iranian natural gas. The EU Commission estimates that by 2030, Iran should be annually selling 25 to 35 billion cubic meters – probably liquid – gas to the EU. BASF natural gas subsidiary Wintershall has also shown interest. During his recent visit in Teheran, Lower Saxony’s Minister of the Economy proposed the construction of a LNG terminal in Wilhelmshaven as a German-Iranian joint venture. This is all happening at a time, when the conflict over Syria – with Iran and Russia on the one side and the West on the other – is escalating.

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The Scramble for Africa

BERLIN(Own report) – German businesses are demanding that the government intensify its support for tapping the “continent of opportunity, Africa” in competition with China and other BRICS countries. Parallel to the West’s waning global influence, German businesses are loosing ground on the African continent. This is why German enterprises are pushing for increasing Hermes trade credit insurances, double taxation treaties, and generally “stronger political support for the German industry in Africa.” A building industry federation is explicitly demanding that future allocations of development funds be tied to orders for German/European firms. The German government has indicated its readiness to implement these policies. The KfW Development Bank and other public-sector banks are already seeking ways to support the German industry’s expansion efforts by expanding credit transactions. Continue reading