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German Industry Rebeling Against Russia Sanctions

Companies are up in arms over Germany's main industrial lobby failing to do its job and represent the interests of the economy

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The article originally appeared at German Economic News. Translated for RI by Mihajlo Doknic

German business protests against EU sanctions on Russia. It seems it’s “bubbling under the surface,” and the lobby association BDI feels the need to call its members to order: “instead of showing sympathy for Russia or China, the companies should rather operate transatlantically."

German business representatives continue to criticize EU sanctions against Russia. For months the industry has felt the consequences of the sanctions, and they cannot understand why they are the ones left “footing the bill” for political decisions. The losses that German companies have suffered as a result of the sanctions already run to billions. In 2015, losses are expected to increase further. For many companies it is just a matter of time before these developments lead to job losses in Germany.

Many companies are disappointed in the BDI [Lobby Association of German Industry]. BDI has hardly distinguished itself in the past: there has been a plan “in the back of the drawer” for many years for a merger with the competing industry lobby association BDA. However, BDI has not had the will so far to reduce its bureaucracy. Both associations are struggling against a loss of importance: companies are sending their own lobbyists to Brussels because they fail to see much usefulness in either institution [BDI and BDA]. BDI plays a rather lacklustre role in Brussels, since the technocrats also prefer talking directly to companies.

Now the pressure seems to have increased on BDI. However, those who expected BDI to undertake courageous action and stand up for the interests of its members have been proven wrong: BDI wants to keep its members on a leash and make them toe the government line. Their leadership hopes to get the government’s support in case the existence of these redundant associations [BDI and BDA] is questioned. BDI’s president Ulrich Grillo therefore attacks the association’s members. According to media reports, he wrote a letter to some 1,000 company and association representatives that was quoted by the German press agency dpa: “signals coming out of German industry that Russian behavior is understandable or justifiable definitely don’t contribute to a solution of the conflict or to the restoration of the European peace order.”

In this conflict with Russia, “business considerations have to give way to sanctions imposed because of Russian violation of international law,” Grillo wrote. He also cautioned on dealings with China, even though he understands those who are impressed by the efficiency of the Chinese government. However, those who praise five-year-plans and a planned economy need to be aware of the fact that this contradicts the principles our market economy system is based upon. German business needs Europe and the U.S. as “safe havens” from which to operate. The increased Chinese will to shape the international system upon which German success is based could jeopardize this success. This warning against China looks somewhat anachronistic: by setting up the Investment Bank AIIB, China has attracted most Western developed countries. Germany will also take part in the AIIB, for many see a safe haven in China from which they can do good business.

Instead of showing sympathy for China and Russia, German companies must increase their efforts to stabilize the transatlantic relationship. Referring to the TTIP negotiations (Transatlantic Trade and Investment Partnership) with the United States, however, he asked the industry representatives to defend the standards and norms of German industry. This note also raised some eyebrows: BDI should not direct this requirement at its members but at the EU Commission, because the commission is negotiating the TTIP

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