Policy Article

Germany’s Trade with Russia in Times of War in Ukraine: What is at Stake?

Authors

  • Klaus Schrader
  • Claus-Friedrich Laaser
Publication Date

The authors show that the momentum of business with Russia was broken after the Russian occupation of Crimea in 2014 in the wake of sanctions and counter-sanctions, and that Russia has since lost importance as a trading partner. In an analysis by product group, they show that individual sectors and companies are more dependent on exports to Russia than is reflected in overall trade. German heavyweights in the "mechanical engineering" or "pharmaceuticals" sectors have above-average shares in Russia, but there is no critical dependence on Russian exports. The Achilles' heel in German trade with Russia remains the import of Russian natural gas, which cannot be replaced in the short term due the present dependence on deliveries via pipelines. Instead of diversifying energy imports after 2014, German dependence continued to increase, as evidenced by a share of Russian natural gas that is now 55 percent. In the authors' view, Russia would be the big loser from economic isolation in the long run. Economic and political disentanglement in the age of globalization would be more costly to Russia than the Soviet Union's efforts to achieve autarky during the "Cold War".

Info

Key Words

  • international trade
  • Russia
  • Sanctions