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Russia faces icy economic winter

The Hague - The first signs of an icy economic winter in the relations between Russia and Europe are becoming visible.

Tobias Baumann, head of the German Chamber of Industry and Trade, has said that his country’s exports to Russia will probably shrink by about 20% this year. The reason, he told the chamber’s internet news service, was the Ukrainian crisis and the West’s economic sanctions against Russia. This would especially affect the machine-building industry.

Baumann said that about 300 000 German jobs depended on Germany’s exports to Russia. These would not be affected immediately, but could be endangered in the medium term.

However, Baumann foresaw a sizeable shrinking of the Russian economy. A recession is very possible, as Russia is no longer an attractive investment to outsiders, he said.

Lars Gutheil, spokesperson for the Dutch-German Chamber of Commerce, said the deterioration of German-Russian economic ties would not effect the stability of the robust German economy. "The internal conjuncture is very stable and is profiting from a still rising consumption. The service sector is also doing very well."

In the meantime, several think tanks are actively looking at ways in which Germany and Europe may lessen their dependence on Russian natural gas. At present, the European Union imports about a third of its natural gas from Russia.

The Institute for Wind Energy and Energy Systems this week came to the conclusion that Europe could wean itself from Russian gas, but that it would cost much effort and investment. If current German government plans are implemented, the country could become independent from Russian gas in 2050. If a total of €300bn is spent, this could be accelerated to 2030.

Current plans include huge investment in better isolation of buildings, as well as the use of geothermic heat, biomass, wind, solar heat and fracking of shale gas.

Opinion polls show that German public opinion has probably reached a tipping point. Whereas the understanding for the Russian position used to be high, a majority of 52% are now in favour of strict economic sanctions against Russia, even if this negatively impacts on the German economy.

Chancellor Angela Merkel, whose political antennae are very sharp, has also stiffened her stance. Whereas she used to be reticent regarding economic action against Russia, she has now come to see it as the alternative to military steps, to which she is implacably opposed.

 - Fin24
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