The German Companies Game of Russian Roulette

The article discusses the impact of Russia's invasion of Ukraine on the European economy, global food security, and the specific role of Germany and its corporate sector in this context.

Impact of Russia's Invasion:

Russia's unprovoked invasion of Ukraine has had far-reaching consequences, undermining the security and prosperity of neighboring regions and wider Europe. It has exacerbated energy costs, increased the risk of stagflation in Europe, and posed a real threat to global food security.

Germany's Role and Transformation:

Germany, as a regional economic and political heavyweight, has undergone significant changes in response to the crisis. It has rapidly worked to reduce its long-term dependency on Russian energy and has emerged as a key supporter of Ukraine's defense. The German government and taxpayers have provided almost 21 billion euros in combined military, humanitarian, and financial assistance to Ukraine.

Contradictory Corporate Actions:

Despite the government's support, the actions of numerous German companies are undermining these efforts. Germany remains the second-largest exporter of goods to Russia after China and is the leading European country in terms of sensitive goods delivered to Russia. These actions benefit Russia’s military and industrial complex and are seen as prolonging the war.

Continued Corporate Presence in Russia:

As of September 2023, a significant portion (67%) of German companies with previous ties to Russia continue to operate in the country. Only a small fraction (8%) have completely exited the Russian market. Among the top revenue-generating German companies in Russia in 2022, only three – Uniper, BMW, and BASF – are withdrawing.

Financial Contributions and Justifications:

German companies contributed over $402 million in profit taxes to Russia in 2022. Many of these companies justify their continued presence in Russia with various reasons. For example, fast-moving consumer goods companies (FMCGs) claim they are providing essential goods or services to the Russian population. However, the validity of these justifications is questioned by the B4Ukraine Coalition, which argues that responsible exit from Russia is possible and necessary.

Risks and Calls for Action:

B4Ukraine urges G7 governments, including Germany, to issue advisories to their companies still operating in Russia, warning them of legal, financial, reputational, and human rights risks. The Coalition warns that continued business in Russia could involve Western companies in the Russian war machine and other criminal activities. It highlights the need for Western firms to reassess their operations in Russia, lest they inadvertently undermine their governments' and people's efforts against the Russian aggression.

In summary, the article sheds light on the complex situation where German government support for Ukraine is being counteracted by the ongoing business activities of German companies in Russia. This presents a challenging scenario where economic interests and ethical considerations are at odds, posing a dilemma for both the corporate sector and policymakers.