AS I HAVE SAID A FEW DAYS AGO, THOSE WHO ARE PUSHING A TOUGH APPROACH TO SANCTIONS ARE UNDERESTIMATING HOW INTEGRATED RUSSIAN BUSINESSES ARE IN THE GLOBAL ECONOMY. THE SANCTIONS ARE VERY LIKELY TO CAUSE A VERY FRAGILE RECOVERY IN EUROPE TO REVERSE ITSELF. ITALIAN AND AUSTRIAN BANKS ARE ALSO EXPOSED TO POTENTIAL LOSSES....AND THEY ARE NOT DOING WELL ENOUGH TO SUSTAIN EVEN SMALL LOSSES. German Chancellor Angela Merkel hasn’t minced words. Unless Vladimir Putin steps back from Ukraine, she’s prepared to back European sanctions that would cause “massive economic and political harm” to Russia. What about the harm Germany would suffer if the showdown escalates into economic warfare?...Among European Union nations, Germany is by far Russia’s most active trading partner. It’s well-known that Germany depends heavily on Russian oil and gas, which accounts for the bulk of the €39.8 billion ($55.4 billion) it imported from the giant to the east in 2012. What may be more surprising is that Germany sells Russia almost as much as it buys, with exports totaling €37.9 billion in 2012—accounting for 31 percent of all European exports to Russia....Some 6,000 German companies are active in Russia, selling everything from pharmaceuticals to cars and machine tools. German companies also have invested heavily in Russian manufacturing, according to a report today in the magazine Spiegel. Knauf, a German building-materials maker, employs more than 5,000 people in its Russian plants, the article says. Such businesses would be on the front lines of a trade war with Russia.
Posted on: Wed, 19 Mar 2014 02:55:18 +0000
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