Russian-German Cooperation: New Horizons
Political tensions and sanctions have led to the situation when maintaining close cooperation between the EU and Russia at the federal level is no longer possible. As of now, the only way to develop economic relations and strengthen cooperation in education and research is to keep regional cooperation alive.
This form of cooperation has, therefore, become once again a hot topic for discussion at the Russian-German Raw Materials Dialogue. Some agreements have been already signed with the help of the Dialogue; these include agreements between the Government of Kamchatka Krai and Siemens, a German multi-industry company, Freiberg University of Mining and Technology and Omsk Oblast, St. Petersburg Mining University and Bavarian chemical cluster. In 2018, the event took place in Potsdam, Germany, and in early 2019, Vladimir Litvinenko, Rector of the Mining University, and Dietmar Woidke, Minister President of Brandenburg, held private talks separately from the Dialogue itself.
As Mr Woidke shares his opinion on the outcome of negotiations, ”We had quite a positive conversation, straight to the point. We talked about improving horizontal communication in such areas as economics, science and research, sports, culture and arts. There is a great interest on our side in this cooperation, as well as in further development of Russian-German relations. Given the fact the common history of our countries had its ups and downs, Germany feels responsible for the improvement of the inter-state relationship. We are planning to continue collaboration within the framework of the Russian-German Raw Materials Dialogue. We depend on this cooperation - some major oil refineries are located on the German territory, and a significant share of them are controlled by Russian Rosneft. We also have good experience gained through partnering with Russian business people; it helps us move ahead".
Germany consists of sixteen federal countries, and each one of them is an independent industrial region. Eisenhüttenstadt is home to several large steel mills. Frankfurt (Oder) is mostly known for instrument-making industry. Ludwigsfelde is a major industrial hub. Cottbus and Seftenberg are mining towns - brown coal is extracted there.
Vasily Osmakov, Deputy Minister of Industry and Trade of the Russian Federation, explains "In Russia, industries and businesses are typically present in the regions. There are hundreds of thousands of enterprises, including companies with foreign capital, of which 4.5 thousand companies are with German capital. This is the largest figure of all the countries having Russia-based entities financed with their capital”.
The Russian Ministry has no doubts that administering from Moscow a company located, for instance, in the Far East cannot be done in complete detail due to the size of the country. However, German colleagues state that industry people often complain they get lost because of not understanding how to reach out to the administration or business representatives of a particular republic or region of the country. The problem is tied to a vast number of subjects of the Russian Federation and a complex system involving different levels of the State administration.
According to Mr Osmakov, the easiest way to make contact with regional representatives is to address one of the trade missions abroad, as their employees can recommend an appropriate industry and suitable partner companies. The State information system industry available at gisp.gov.ru can be of help as well. Through that website, one can acquaint themselves with the map of industrial opportunities in Russia or connect with the authorities.
Specialised international conferences are, however, a more efficient cooperation platform as they enable real-time communication among representatives of a particular industry.
As Vladimir Litvinenko, Rector of the Mining University, notes "Russian-German Raw Materials Dialogue is an event that shows that we have achieved reasonably good progress in developing relations between our countries. This year, the Dialogue was attended by six Prime Ministers - either former or current - from the German side, and by the Governors of almost all commodity regions from the Russian side. Numerous proposals and approaches were discussed during plenary discussions and closed meetings. Some of the solutions mentioned there will most certainly be reflected in the joint interregional business initiatives”.
Both the Government and businesses of Saxony are interested in further expansion of economic relations with certain Russian regions. Over 600 companies working in such fields as mechanical engineering, manufacturing of vehicle components, agricultural production, have been already exporting their goods to Russia.
Stanislaw Tillich, former Minister President of the Free State of Saxony, provides some more information "German-Russian cooperation in the mining sector originates from Saxony. Our region, being a part of the former GDR, had been in contact with the USSR; now we are maintaining contacts with Russia. Firstly, thousands of professors and students are working and studying in our universities. Secondly, we keep close ties not only between scientific institutions but also between enterprises. After Germany had been united, pre-existing agreements were renewed, and we kept in contact with the Russian side. Representatives of 250 German companies currently take part in the Russian-German Raw Materials Dialogue, as they want to deepen their contacts with Russian partners and establish the new ones. Business partnership with Russian regions is a notable contribution to the economy of Saxony. As an example, we have been cooperating with Kaluga in the field of automotive manufacturing. We are also maintaining strong ties in a number of areas with Ufa and Kazan”.
Russian supplies to Germany are for the most part oil and natural gas products. The largest economic agent influencing the trade between Saxony and Russian regions is Gazprom.
As Reiner Haseloff, Minister President of Saxony-Anhalt, says ”The energy partnership is given high priority in Saxony-Anhalt because the advancement of our federal state, as also of the whole of Germany, is impossible without mineral resources. Of course, some major changes have affected the commodity industry and have still been affecting it: the world is moving towards decarbonisation, environmental protection and reduction of emissions have become the topics that are more important than ever before. To move in that direction, we need to join our efforts. Russian-German cooperation will, among other things, be intensified due to the establishment of joint enterprises developing new hydrogen-based technologies. Our common work should find its reflection in the fields of science and academic research. Promoting the exchange of students, young researchers, and professors will further contribute to cooperation between our countries. Despite the above-mentioned, we should not forget though that we have a Katharina, gas storage facility in Saxony-Anhalt that is operated jointly by Gazprom and VNG, and regardless of the trends we are currently observing, fossil energy sources will continue playing an important role for now. Therefore, there is still potential for cooperation in this area”.
There should be no surprise then that Germans are specifically interested in strengthening business ties with the heads of the subjects of the Ural Federal district, which is a main petroliferous region in Russia.
According to Natalya Komarova, Governor of the Khanty-Mansi Autonomous Okrug - Yugra (in short: Yugra) ”The value of external trade of our region with Germany for the first half of 2019 amounted to 770 million US dollars, which is 16% of the total turnover of Yugra. The main articles of export are hydrocarbons, petrochemical products and products of gas conversion. Each year we produce about 36 billion cubic meters of oil and natural gas. We possess unique knowledge and skills in mining, whereas the German side has extensive experience in chemical production and a significant role in the German business market. We are definitely interested in expanding cooperation”.
Yugra is also home to high-purity quartz, which can be used to make semiconductors. The Governor suggested as an area of future cooperation establishment of a holding company administering manufacturing of quartz-made products on the Russian territory, which should be executed with either participation of one of the Russian state corporations or through the share buyback of Polar Quartz OJSC, Rusnano.
Of course, raw materials are not the only resource Germans are interested in. Kemerovokhimmash, Kuzbass-based enterprise specialising in mechanical engineering and instrument making, has been lately involved in manufacturing spare parts and accessory components for quarrying equipment of Liebherr. The first-ever - throughout the history of Liebherr - mining dump truck was assembled here, outside of Germany, in Kuzbass.
Training of high-skilled workers is another promising area of cooperation. The possible work directions include elaborating joint multidisciplinary educational programmes and establishing the system of international training aimed at developing new competencies for industry specialists.
As the Governor of Yugra points out, "The popularity of engineering education in Russia is on the rise. We have a lot to offer to our partners. The International Competence Centre for Mining-Engineering Education under the auspices of UNESCO was established in St. Petersburg, hosted by the Mining University. Yugra was approved as a core region for the oil and gas engineering related matters because we house numerous technological and industrial parks, and our enterprises are using the most advanced technologies. I believe that cooperation of Russian companies and universities with German research institutions - in particular in this area - will help build a global dialogue in such areas as natural sciences, engineering education, and contribute to the creation of new scientific ideas and innovations”.