German business leader Michael Harms once stood by Russia through thick and thin.
While head of the German-Russian Chamber of Commerce in Moscow, he promoted ties even after Moscow annexed Crimea in 2014. As managing director at Germany’s Committee on East European Economic Relations, he supported the now suspended Nord Stream 2 pipeline between Russia and Germany.
But when Russian President Vladimir Putin launched an invasion of Ukraine last month, Harms knew the work that had defined his career was over.
“It is a terrible emotional situation when I see people dying in countries I know very well. . . Professionally, I dedicated almost my whole life to these relationships, ”he told the Financial Times. “When you see this effort was somehow all in vain, you feel strongly, personally affected.”
German business chiefs such as Harms have been the drivers of the government’s longstanding Trade by trade – change through trade – strategy of engaging with Moscow. Critics argued these links – and a desire not to damage the economic interests they forged – had made Berlin too soft on the Kremlin.
But as public outrage at the invasion has mounted and Germany’s government has joined the international push to isolate Russia through swingeing sanctions, including the suspension of Nord Stream 2, commerce between the countries has ground almost to halt.
Some 3,650 German companies were active in Russia before the war in Ukraine, according to the Association of German Chambers of Commerce and Industry (DIHK). They had invested € 25bn in the country by 2019, according to Bundesbank figures, and employed 280,000 people there.
Before the war, hundreds of thousands of containers moved annually between Russia and the German port of Hamburg. In recent days, the number of movements was “approaching zero”, Volker Treier, DIHK’s head of foreign trade, told journalists last week.
Despite the sudden large-scale commercial losses and disruption, Treier said, “we have not heard a single critical voice from the German business community arguing that the sanctions are wrong”.
Disentangling business links will be painful for both countries, with partnerships in areas from automobile manufacturing and IT to agriculture. According to official data, Germany imported about € 33bn worth of goods from Russia last year, while its exports to the country were worth just over € 26.6bn.
Germany depends on Russia for imports of more than 55 per cent of its gas, half of its coal and 35 per cent of its oil, and has so far rejected the idea of an embargo on the country’s fossil fuels.
The two countries also have strong academic and cultural links – relationships particularly valued in eastern Germany, where five federal states once formed the German Democratic Republic that lay on Moscow’s side of the iron curtain. Since the collapse of the Soviet Union in the early 1990s and German reunification, Germans from the east have maintained an open stance towards Russia.
For them, “Russia was a big power, but a friendly big power, just like the US was for me as someone growing up in [former] West Germany, ”said Oliver Günther, president of the University of Potsdam, which has in recent days ended more than a dozen academic and research relationships with Russian institutions.
Many faculty members at the university, located in eastern Germany, have maintained exchange programs with Russia for more than three decades, and experience the rupture as a personal as well as professional blow.
“There was a good tradition, and that means it hurts even more,” Günther said. “For these east Germans, it’s a very different memory. . . And this leads to a kind of cognitive dissonance. ”
Günther also pointed out the impact on scientific research. Major projects halted include collaboration between DESY, Germany’s largest particle accelerator research center, and Russian institutions – a step never taken even during the Cold War. Co-operation between health authorities and researchers at the Koch-Metschnikow Forum, which was working to bring Russian healthcare up to EU standards, has also been suspended,
The severing of ties has not only affected high-profile companies and research centers.
Towns including Hamburg and Emden are canceling “sister city” status with Russian counterparts. Local politicians have resigned from the small Baltic Sea Foundation – a climate protection fund whose original endowment was supplied by the first Nord Stream pipeline as compensation for environmental damage. And in Frankfurt, German banks including Deutsche Bank and ING have stepped in to fund a local ice hockey team after it ended a sponsorship deal with Russian state-owned VTB bank.
Unlike in previous rounds of sanctions or periods of tension with Russia, many prominent so-called Putinversteher, or “Putin sympathisers” – as critics describe those seen as too close to the Russian leader – have stood down from organizations with ties to Russia or denounced the invasion.
Manuela Schwesig, premier of the state of Mecklenburg-Vorpommern in Germany’s north-east, where the first Nord Stream pipeline and Nord Stream 2 emerge, once defended the region’s “Russia Day”, founded to promote economic ties in the same year Moscow annexed Crimea .
Schwesig has now canceled the event, tweeting that it was clear the Ukraine conflict had “fundamentally changed” German-Russian relations. “We all hope for a quick end to the violence,” she wrote. “However, our relationship with Russia will not be the same afterwards as it was before.”
Harms agrees: his committee now plans to support companies seeking investments in Poland or Central Asia. It will also try to maintain links with Ukrainian businesses and support some relocating to Germany.
However, not all German companies are completely pulling out of Russia, Harms noted, and part of him still believes the era of Trade by trade is not completely over.
“In the short term, it is true economic co-operation cannot prevent terrible political developments,” he said. “But a lot of trust was built up. . . In the long term, I think [Wandel durch Handel ] will be even more important. ”