Tensions with Russia

Time to Defrost

Aug. 16, 2015 - London, London, UK - London, UK. Former Prime Minister Gordon Brown gives a speech about the future of the Labour Party during 'Power For A Purpose' event hosted by Society of Labour Lawyers at Southbank Centre in London on Sunday, August 16, 2015. (Credit Image: Tolga Akmen/London News Pictures via ZUMA Wire)
Russian President Vladimir Putin has been unmoved by sanctions from the West.
  • Why it matters

    Why it matters

    Despite tough economic sanctions against Russia from the West, Moscow has refused to adjust its controversial foreign policy decisions.

  • Facts

    Facts

    • In partnership with Russia’s Gazprom, BASF subsidiary Wintershall will extract gas and oil in Siberia.
    • Wintershall agreed to transfer to Gazprom its share of a joint natural gas trading and storage business.
    • Gazprom also received a share in oil and gas exploration in the North Sea.
  • Audio

    Audio

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When commentators evaluate current relations between Russia and the West, they tend toward the dramatic, even talking of a “Third Cold War.”

Given the events of the last year and a half, this bitter label is certainly not all wrong. But an increasing number of politicians and media voices are now calling for pragmatic cooperation with Russia.

Whether the issue is with Moscow’s approach to Ukraine, Syria or climate policy, we should approach these problems not in a spirit of confrontation, but of partnership, they say.

These voices, both realistic and important, deserve to be heard.

Business can build bridges that can be crossed in everyday dealings.

Nothing against idealists, but politics always requires responsible pragmatism. And that applies equally to the business sector.

Entrepreneurial activity has to be based on realistic estimations, especially in my company’s industry, which is exploring and extracting oil and gas reserves. It’s all about long-term investment and cooperation with the biggest producers worldwide – the kind that can survive even the chilliest of times.

The West would like Russia to be different. But Russia will not always adhere to Western expectations. We coexist in this atmosphere of tension, with sometimes justified criticism from Western nations and a necessary helping of pragmatism. We might not like the facts, but they remain facts.

At the end of 2014, Wintershall decided not to proceed with an exchange deal that had already been negotiated with Gazprom, the Russian oil and gas company. It is no secret that the background to this was the political climate at the time.

 

German Business in Russia-02

 

That was nearly a year ago. A further escalation of sanctions was prevented, but the political positions on both sides remain hardly compatible.

Existing sanctions have been tightened. But while they have had a debilitating effect on the economy and the Russian people, the country’s leaders are unmoved. There is still no tangible political will to find common ground.

What does all that mean for the economy, and specifically for an energy company like Wintershall?

It means that we must continue to act on the basis of the political status quo and realistic estimates — because without Russia’s resources, there can be no energy security for Europe in the foreseeable future. 

Of course, the Middle East has enormous oil reserves, but the political situation there is often unstable. Liquid gas from the United States is just too expensive. For supplies to come exclusively from Norway and the Netherlands is unrealistic. That is why we need other partners, and that is why we need Russia.

But what should the business sector do in these politically chilly times?

First, it can show examples of cooperation that work. Even if such cooperation is purely commercial at first, it sends an important signal that can be seen from afar. It gives us the necessary terrain for rapprochement. Business can build bridges that can be crossed in everyday dealings.

That is why I am happy that we successfully concluded our deal with Gazprom to exchange parts of our companies. It was an intensification of our cooperation of the last 25 years. In the future, Wintershall can extract oil and gas in Russia directly at the source.

This is a long-term return on our investment that also creates supply security for Europe. And Gazprom will likely invest more in Europe in the future. It’s a major signal of mutual trust that we are convinced will be heard beyond corporate headquarters in Germany and Russia.

Both sides are aware of the fact that European and Russian companies are not always welcome in each others’ respective markets. But we are convinced that such pragmatic steps are the only way for us to become closer and set a positive agenda.

While taking this path can be difficult, it is worthwhile.

 

To contact the author: gastautor@handelsblatt.com

 

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