Oliver Hermes: “Impoverishment of the population is not the aim of the sanctions policy”

Statement by Oliver Hermes, Chairman of the Committee on Eastern Europe, on German companies’ business in Russia:

“German companies engaged in Russia are fully implementing the sanctions against Russia to the letter, as they have been since 2014. Nevertheless, sweeping accusations are repeatedly leveled against German and European companies that continue to operate in Russia. This criticism is unjustified. The aim of the Western sanctions policy, which we expressly support, is to change the behavior of the Russian leadership, not to completely destroy the Russian economy and impoverish the population. Nor is the complete severance of European-Russian economic contacts the intention of the sanctions policy. This would be completely counterproductive for a hopefully more peaceful future on our continent.

There are a number of economic sectors in which continued economic activity is not only lawful but also legitimate. These areas have deliberately not been sanctioned. This applies, for example, to the provision of medicines, medical goods and foodstuffs for the basic needs of the Russian population, the securing of necessary supplies of raw materials and energy to the EU, the safety of technical equipment and means of transport and, last but not least, the functioning of the agricultural sector. Russia, like Ukraine, supplies the world market with urgently needed agricultural products such as grain. Sanctions in this area would lead to further shortages and price increases and hit the poorest countries in particular.

We therefore firmly reject blanket condemnations of companies that continue to be active on the Russian market.

Added to this is the responsibility that German companies bear for their 280,000 employees in Russia. A sale of production facilities would hardly be possible at the present time anyway and would play into the hands of market players from countries that do not implement the sanctions against Russia. There is also the threat of contractual penalties up to and including complete loss of assets and legal consequences for senior employees. We therefore firmly reject blanket condemnations of companies that continue to operate on the Russian market.

There are also well-founded business relationships within the framework of the sanctions policy. However, these are increasingly being called into question by the Russian side. Plans by the Russian government to impose foreign management on foreign companies are putting the continued existence of the companies and thousands of jobs in Russia at risk. If foreign companies and their subsidiaries were forced to disregard Western sanctions, this would lead to an exodus from Russia. We therefore urge the Russian government not to violate the ownership and disposition of foreign companies and to comply with investment protection agreements. The attack on Ukraine has already caused the most serious damage to Russia as an investment and business location, and this course must be ended urgently.”

About the Committee on Eastern European Economic Relations:

The Committee on Eastern European Economic Relations e.V. (founded in 1952) promotes German business in the 29 countries of Central, Eastern and Southeastern Europe, the South Caucasus and Central Asia. German trade with Eastern Europe accounts for around one-fifth of Germany’s total foreign trade, making it more important than trade with the United States and China combined. The Committee on Eastern European Economic Relations has around 350 member companies and is supported by six leading German business associations – BDI, BGA, Bankenverband, DIHK, GDV and ZDH.

 

Laura Venema
22.03.2022
von Laura Venema