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German Exporters Fire Warning Shot About Russia “Sanction-Spiral,” Banks At Risk

It took a while. But it had to come, the public warning shot – after what must have been a ferocious lobbying campaign behind closed doors. No one in Germany is allowed to get in the way of the sacrosanct exporters. The German economic model, to the chagrin of neighboring countries, is based on them.

It wasn’t as bombastic as US Secretary of State John Kerry’s blast to lawmakers that the Ukrainian debacle could “get ugly fast,” and “in multiple directions,” but it had the heft of the German export industry.

Anton Börner, president of the German Association of Exporters (BGA), which represents 120,000 companies, the lifeblood of the economy, warned at a press conference in Berlin that further escalation of the crisis in the Ukraine could hit exporters very hard. He said that the BGA expected exports to rise 3% to €1.13 trillion and imports 2% to €914 billion for a trade surplus of €215.6 billion – the highest in history. But “if the crisis in the Crimea escalates further,” these wondrous forecasts of endlessly growing exports and surpluses “could turn very quickly into a mal-calculation.”

The sanction spiral

Further intensification of “the most serious political crisis in Europe since the end of the war in former Yugoslavia” would degrade bilateral economic relations between the EU and Russia. He warned not to underestimate the drag of secondary and tertiary effects on the world economy. “Russia itself, Europe, Germany, and the whole world have a lot to lose,” he said. “But if there’s a sanction-spiral, Germany has the most to lose.”

About 6,200 German companies were trading with Russia or had invested there. The bilateral trade volume was over €76 billion last year. And German companies have invested €20 billion in Russia. The “sanctions-spiral” that is currently gaining momentum could have “unforeseen consequences,” especially for Russia, he said. They’d be “painful for the German economy, but life-threatening for the Russian economy.”

And there’d be a price to pay, not only of economic nature, but also of political nature, he warned.

Better than pushing someone into a corner

“We merchants are always in favor of keeping a communication channel open,” he said. Within the Western world, Germany had the best connections to Russia, politically, diplomatically, economically, and culturally. So it would have to play a decisive mediator role, Börner said. “Talking is better than pushing someone into a corner.”

Given the “inexperienced and opaque” Ukrainian government, there were additional uncertainties – another reason to deescalate the crisis. The EU would need to integrate Russia and Putin in the decision-making processes. “At eye level and as part of the solution.” Putin should be given the “widest possible understanding for his situation,” but at the same time, it should become clear that unilateral changes of international contracts and borders would “lead his country to the sidelines.”

And the banks?

Read the rest at Testosterone PitView original post.

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