Hundreds of German companies to stay in Russia despite sanctions

Hundreds of German companies want to continue doing business in Russia despite the increasingly stringent Western sanctions in the wake of Moscow's war against Ukraine, according to a survey.

"Only 4% of German companies plan to exit the market," the chairman of the German-Russian Chamber of Commerce, Matthias Schepp, said referring to a new survey on the business climate in Russia published on Thursday.

Many feared losing a lot of money if they left: "Anyone who is still here in Russia after four years of bloodshed and sanctions wants to hold out," Schepp told dpa in Moscow regarding the survey of around 260 entrepreneurs.

The importance of the Russian market continues to be appreciated, he said. According to estimates, around 2,000 German companies are still active in the world's largest country by area.

The chamber estimates German assets in Russia to be worth more than €100 billion ($117.5 billion). "German assets are even growing because Russian laws prevent profits from being transferred on a larger scale," said Schepp.

They should be protected rather than handed over to the Russian state budget or Kremlin-affiliated magnates, he said.

Overall, the business climate in Russia and the expectations of German companies have noticeably deteriorated. More than half of the companies expect the economy in Russia to shrink this year.

There is a threat of further tightening of sanctions if the war does not end.

Schepp: Companies see greater damage for Germany

In the survey seen by dpa, more than half of the German companies view the punitive measures as causing "strong or very strong damage" to the Russian economy, unlike the Kremlin, explained Schepp.

"However, 49% of the German companies active in Russia also believe that the sanctions harm Germany more than Russia," he added.

From Schepp's perspective, German and European politicians underestimate the "resilience of the Russian economy" faced with the sanctions. "Lack of information leads to miscalculations about the actual situation in Russia - and this in matters of war and peace," said Schepp.

"Wishful thinking and, in part, denial of reality regularly lead to underestimating the endurance of the Russian population," he said.

"In the economic war that accompanies the bloodshed in Ukraine, it is a very ambitious bet when European politicians rely on more sanctions and economic pressure to force Russia to the negotiating table and to make concessions," he said.

According to the survey, growth is expected primarily in the areas of IT and telecommunications, pharmaceuticals and health care, as well as agriculture and the food industry.

With 750 members, the German-Russian Chamber of Commerce is by its own account the largest foreign business association in Russia.