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European business community concerned over new Russian sanctions

April 26, 2014 at 7:19 PM EDT
Leaders from the Group of Seven have agreed to quickly impose more sanctions against Russia in response to the crisis in Ukraine. How will these measures affect Russia’s business partners in the West? Alison Stewart speaks with Stephen Szabo at the Transatlantic Academy about the significant economic ties between Europe and Russia.

ALISON STEWART: Last night on the NewsHour, you heard how the new sanctions planned against Russia would affect the economy there, but those sanctions might also come at a cost to some of Russia’s business partners in the West — most of all, in Germany. For more about that we are joined tonight from Washington by Stephen Szabo, he’s the executive director of the Transatlantic Academy. And Stephen it’s clear that stakes are higher in Europe, rather than in the United States, when it comes to the situation with Russia, but just for context can you tell us what are the most significant economic ties between Europe and Russia, and most specifically Germany because of its position as a power player.

STEPHEN SZABO: Yes, well first of all with the German case, energy is a very big factor. They get about a third of their energy from Russia, both gas and oil, so that’s a major player. They also, the german energy companies are very close linked in with Gazprom and other Russian companies. So there’s a really close interlocking between those two. Secondly, they sell a lot of automobiles and manufacturing to Russia. Engineering is a big thing. And I think one of the most interesting facts that I’ve seen recently was the head of one of the biggest German engineering companies, Siemens, went to Moscow the week after the annexation of Crimea and met with Putin and assured him that they would continue a long term relationship with Russia. And that was a signal to me that the German business community is clearly concerned about maintaining its investments and even broadening them in the future.

ALISON STEWART: On the front page of the New York Times, there’s an article that details just how concerned the European business community is about these sanctions. What is it that the European business community wants and what doesn’t it want?

STEPHEN SZABO: Oh, I think it can live, it’s gonna have to live with some modified or at least targeted sanctions, but not major what they’re called sectoral sanctions on major sectors like energy or finance. And I think also the point that you raised before, it’s not just Germany — I mean there’s a lot of Russian money in London, for example, the Italians have a lot of energy connections with the Russians. So it goes way beyond that and I think that’s the concern that they have. What they’re lobbying for now is to stay cool. And that’s the same thing that American companies are saying to Obama: ‘don’t make this into a bigger thing than it has to be, let’s see if we can get diplomacy to work, let’s try to not do any long term damage to our economic relationship, and most importantly we’re just coming out of an economic crisis don’t pull us back into another one by a new financial crisis with Russia.’

ALISON STEWART: Stephen, this week Chancellor Merkel is coming to the United States, she’ll be at the White House on Friday. Last time she was in the states there was a state dinner in her honor. Now shes coming after it was revealed that the NSA had been wire tapping her phone. What is the conversation going to be like? What is going to be the first thing on the agenda between Merkel and Obama and what will be the second thing on the agenda?

STEPHEN SZABO: Right, well it depends on who you’re talking to. I think if it’s Merkel she definitely wants to get this NSA thing behind them and she’ll press him on that a lot. But she’s also very interested in this big Transatlantic trade agreement that is stalling right now in the Congress and in the EU. and she’s certainly going to want to push on that. From Obama’s point of view, he clearly wants to get some sense from her on how far Russia will go on Russia policy and on sanctions. Because he knows that without Germany being closely aligned with the American position, the U.S. will be isolated and the policy will be pretty ineffective.

ALISON STEWART: Can we talk about the relationship matrix a little bit, Stephen. Chancellor Merkel has a relationship with President Putin and one with President Obama. How does her relationship with each man affect their relationship with each other.

STEPHEN SZABO: Right, I think that’s a good point. I mean she has sort of bad, I would say a very bad relationship with Putin. She doesn’t like him at all, she thinks he’s overly macho and is kind of ridiculous in some ways. And she had this famous statement about two weeks ago when she was talking to Obama about Putin saying ‘he lives in another world.’ At the same time her relationship with Obama’s not very good. She got incensed over the bugging of her phone and she let Obama know it. At the same time, she’s a very practical, business-like politician, very realistic and she knows that she can’t let her personal emotions get too involved in these bigger interstate relationships. So I would see them having a very business-like relationship. They also respect, I think Obama and Merkel respect each other as very smart, realistic politicians. And I think Obama really depends on Merkel right now for advice on Russia because she’s spending so much time talking with Putin and with the Russians.

ALISON STEWART: It should be an interesting week in Washington this upcoming week. Stephen Szabo, thank you so much for your time.

STEPHEN SZABO: My pleasure, thank you.