German firms hurt by Russian sanctions against Turkey

German firms hurt by Russian sanctions against Turkey

BERLIN - Agence France-Presse
German firms hurt by Russian sanctions against Turkey

Fruits, vegetables and other products are seen on sale at a grocery store of the food retailer Dixy in Moscow. REUTERS Photo

German companies doing business in Russia have suffered collateral damage from Moscow’s sanctions against Turkey, a business group said on Dec. 18.

The impact of sanctions on those companies has been “considerable,” said the president of the German-Russian chamber of commerce, Rainer Seele.

“Two-thirds of them have been hit,” he said.

Many of these are companies in the car sector which have production lines in Russia but obtain auto parts in Turkey.

Russian authorities have warned that car manufacturers in the country may have to halt production as deliveries of Turkish supplies have been greatly delayed after Moscow imposed economic sanctions on Ankara over the downing of a Russian jet.

“If the situation perseveres, companies will be forced to stop production,” Saint Petersburg deputy governor Sergei Movchan said, his press service told AFP earlier this month.

Although products manufactured in Turkey’s light industry sector were left out of the ban announced at the end of November, which covered fruits and vegetables, customs procedures are now lengthier and more complex, Seele said.

The embargo is just another round of bad news for German companies doing business with Russia, as many had already been hurt by Western sanctions against Moscow for backing separatists in eastern Ukraine.

The European Union imposed broad economic sanctions targeting Russia’s banking, oil and defense sectors after the July 2014 shooting down of a Malaysia Airlines jet, widely blamed on pro-Russian rebels in eastern Ukraine.     

It has led to a sharp drop in German exports to Russia, which reached just 20 billion euros this year, around half that of 2013, said the chamber of commerce’s deputy chief Volker Treier.

For 2016, the chamber expects another 5.0 percent fall in sales to Russia.

Germany was a key supplier of farm produce, including dairy products, to Russia before the sanctions were applied. It also sells machinery, chemical products and cars.

The German-Russian chamber, which groups 850 companies, has been calling for the sanctions against Russia to be eased, given what it describes as progress in bringing peace to Ukraine.

Over the past few months, fighting between Kiev’s forces and pro-Russian separatists in eastern Ukraine has largely died down although sporadic clashes still occur.

The United Nations last week hailed a “sharp de-escalation of hostilities” since the warring sides signed a new truce in September in a conflict that has claimed more than 9,000 lives.