Russian-German economic and trade relations traditionally occupy a central place in the overall pattern of Russia's foreign economic ties. Germany continues today to be Russia's largest trade and financial partner in its relations with western states. Germany accounts for 17.5% of Russia's total foreign trade turnover with the West, and approximately 30% of its financial obligations to western industrialised countries.
Deliveries from Germany cover approximately 40% of Russia's imports of machinery and equipment, 33% of leather footwear, 18% of medications, and 12% of meat and meat products. In recent years, approximately 25% of Russia's natural gas export and rolled ferrous stock, as well as 20% of its oil, processed timber and cardboard, are sold on the German market.
Russia satisfies a total of only 1.5% of Germany's total import needs, although with respect to certain commodities that occupy an important place in the German economy, the figure is significantly higher. Russian supplies account for almost 45% of Germany's total import of natural gas, 40% of anthracite, 24% of oil, 23% of coniferous wood pulp, 10% to 40% of various nonferrous metals, approximately 10% of diesel fuel, and over 4% of ferrous metals.
Extensive and stable relations with German counteragents, as well as the rather favourable trade policy promise to maintain and even enhance the role of Germany as Russia's leading political trade partner in the future.
The strong economic, scientific and technical potential of both countries, the reciprocity of their economies and their geographical proximity determine the interest of the two countries in stabilising and further expanding economic cooperation.
Germany is still Russia's largest western trade partner. Mutual trade turnover has become established at quite a high level and amounted to 33.5 billion DM in 1997 (+24%). Germany accounts for 13% of Russia's trade turnover, and Russia for approximately 2% of Germany's. The increase in Russian exports has been maintained (11% up on 1996), amounting to 17.1 billion DM. Imports increased by 43% to reach 16.4 billion DM. As a result, Russia's positive balance reached 0.7 billion DM.
There were no significant changes in trade turnover pattern during 1997. The percentage of ready-made items in the export and import structure amounted to 7.6% and 79.2%, respectively, including machinery and equipment of 1.5% and 48%. Russia delivered 24.5 million tons of oil to Germany and 32.5 billion cubic metres of natural gas.
In addition to oil and natural gas, Russia also exports significant amounts of nonferrous metals, chemicals, ferrous metals, ferroalloys, cellulose, and saw timber, as well as such mechanical engineering products as cars, machine-tools, electrical equipment, tools and instruments, optics, etc.
With respect to imports, in addition to machinery and equipment, Germany supplies large consignments of consumer goods and foodstuffs.
According to estimates, trade turnover with Germany for 1998 will amount to 33 billion DM, including 15 billion DM in exports and 18 billion DM in imports. Trade turnover in 1998 will remain at approximately the same level as 1997.
On the whole, trade policy conditions for economic cooperation between Russia and Germany are estimated as favourable. An agreement on partnership and cooperation between Russia and the EU reinforces the trade political terms between Russia and Germany in effect and provides for the EU countries’ obligations with respect to further liberalisation in trade with Russia. The overall system of preferences for Russian exports still applies, although it has undergone significant changes. The scope of preferences in recent years has gradually decreased. Moreover, protective measures are also in effect: anti-dumping procedures and quotas, including with respect to Russian steel products. In addition, non-tariff restrictions are creating an increasingly serious obstacle to Russian commodities, particularly mechanical engineering products; strict rules and standards are in effect, specifically with respect to safety and environmental friendliness. Despite reorganisation of the COCOM system, strict control regulations have been established in Germany over the export of military and dual-purpose commodities, and responsibility for observing them has increased.
The volume of German investments in the Russian economy in 1997 amounted to approximately US billion (US billion in direct investments). The volume of accumulated investments from Germany as of 1 July 1998 amounted to US billion (32% of all accumulated investments), only US billion of them being direct investments (8.2% of all accumulated direct foreign investments). Investors are cautious, and investments go primarily to the commercial and service sectors. Among the most promising and largest investment cooperation projects are the following: laying of the Yamal-Europe gas pipeline; building of the Berlin-Warsaw-Minsk-Moscow highway; construction of a cold rolling shop at the Magnitogorsk Metallurgical Combine (2000 mill); joint manufacture of low-tonnage vehicles, jeeps and diesel engines at the Ulyanovsk Automobile Plant; modernisation of the Oskol Metal Combine; modernisation of the Perm and other oil refineries.
More than 2,000 Russian-German joint ventures operate in Russia, most of them in Moscow and St. Petersburg. For the purpose of uniting the efforts of German companies for investment analysis and assimilation of the Russian market, German partners formed a Union of Representatives of the German Economy in Russia in March 1995 in Moscow, and even earlier, a Representative Agency of the German Economy was founded in Moscow. They opened the House of German Economy on 5 March 1997 in Moscow (5-7 First Kazachy per., tel. (095) 234 4950 to 54. Elena Kazakova).
On the other hand, Russian enterprises and organisations are stepping up efforts to gain access to the German economy, participate in privatisation, and carry out direct investment. The volume of Russian investment in the German economy is estimated at approximately 3 billion DM, a significant part of which constitute investments by Rosneft in the construction of the Lein 2000 Oil Refinery and by Gazprom in projects with the Wintershalle Company in the German gas industry. More than 100 mixed companies (associations) involving Russian capital operate in Germany, mainly in the non-production sphere.
Round tables held in Moscow in January 1996 and 1997 and a seminar in Dusseldorf in March 1996, as well as the Chelyabinsk Economic Forum at the German Embassy (May 1996), and the Berlin Economic Forum (June 1997) in Moscow were devoted to investment cooperation.
Germany is Russia's largest creditor. Russia's total credit debt to Germany is regulated within the framework of the Paris and London Clubs. In March 1996, the German government granted Russia credit in the amount of 4 billion DM, including 3 billion DM for fiscal needs. On 24 May 1996, a Memorandum on the Granting and Use of Untied Credit of 1 billion DM was signed for financing investment projects in the following areas: infrastructure (telecommunications, transportation, sea ports); the extracting and refining industries; environmental protection; public health. As of 1 October 1998, in accordance with a list approved by the Russian government on 10 October 1996, decisions were made to finance projects in a total amount of 1.14 billion DM.
Crediting is carried out in Germany with the assistance of the Hermes Insurance Company for financing export deliveries. Since July 1994, privileged conditions have been cancelled (deferred payment for up to 10 years, 100% crediting of the contract cost, non-payment of the principal for the first three years). The fund limit for deliveries to Russia insured by Hermes in the amount of 1.5 billion DM was allotted for 1996, i.e. at the 1995 level, including 600 billion DM for deliveries from new German lands, and 900 million DM for deliveries from new and old German lands equally. Russia has been transferred from the 5th, the worst, to the 4th, more favourable, exposure category. The Hermes-96 credit line has been used in full.
One and a half billion DM were allotted in 1997 for insuring deliveries to Russia through Hermes. In so doing, although there was to be no breakdown into "east" and "west," the advantage still went to companies from new German lands. The advance portion of 15% can be paid in parts: 5% in cash, and 10% by opening an unrecoverable letter of credit through a bank approved by the German partners.
As of 1 October 1998, Russian Government orders have been adopted on financing projects in the amount of 2.1 billion DM using the Hermes-97 credit line; the conditions and limits for Russia (1.5 billion DM) are basically the same for 1998 as the previous year.
The German credit is to be used efficiently thanks to the following measures: careful selection of cooperation projects, setting priorities based on state interests, searching for weak points in the settlement of advance payments (15% of the credits), and amending pertinent laws to improve the investment climate in Russia. In particular, potential investors, including those from Germany, are placing high hopes on the new Law on Foreign Investments (the draft has been under review in the Federal Assembly since 1996).
A serious problem curbing and burdening economic and trade ties with Germany is the current commercial debt to approximately 600 German companies amounting to US billion. The terms of this debt repayment, which envisage the issue of promissory notes, are set forth in the Russian Government Statement on Rescheduling of the Commercial Debt of the Former Soviet Union to Foreign Creditors of 1 October 1994. However, the German side is not satisfied with it. The Germans are willing to accept a combined decision, which includes the signing of an agreement on debt rescheduling, the issue of promissory notes, the exchange of debts for shares in Russian enterprises, as well as direct repayment of the debt.
In 1993-97, negotiations were held with the Eastern Committee of the German Economy, as organisation authorised by the German side, on settling this problem. The Hermes Company, which is authorised by 500 German companies, was entrusted with consolidating the debt and drafting an agreement.
In 1996-97, technical audits of the debt were conducted. After the Russian government approves the procedure and financial conditions for restructuring the debt, the final stage in the negotiations with the German side will be conducted on settling the current debt to German companies.
The main organisational component of economic cooperation is the permanent Advisory Council of Economic, Scientific and Technical Cooperation. The aim of the Council is to promote the development of economic and trade relations between the two countries at a government level.
The regular, sixth session of the Council was held on 29-30 May 1997 in Russia (Yekaterinburg). Those in attendance discussed the condition of reciprocal trade and improvement in the conditions of economic and trade cooperation; financial problems in bilateral economic cooperation; implementation of investment projects; prospects for regional cooperation; and the activity of the Council's working groups. The Russian and German delegations were headed by co-chairmen of the Advisory Council, Russian Government Deputy Chairman and Minister of the Economy Yakov Urinson and German Minister of Economic Affairs Gunter Rexrodt.
The sides pledged to step up their activity in developing and expanding spheres of economic relations (trade, services, industrial, scientific and technical cooperation, investment, regional economic relations, credit relations, etc.). The sides are faced with strengthening the organisational structures of bilateral economic and trade relations, and primarily improving the work of the Advisory Council, its secretariats, and the activity of the working groups at the branch level.
Economic relations between Russia and Germany are acquiring a certain regional element. Economic relations between individual Russian regions and German lands are gaining speed. This concerns North Rhein-Westfalia, Brandenburg, Bavaria, and Baden-Wurttemberg. Moreover, the German federal department of special assignments for privatising enterprises in eastern lands at one time entered framework credit and trade agreements with the administrations of the Perm, Tyumen, Chelyabinsk, Orenburg, and Sverdlovsk regions, Tataria, Bashkortostan, and Komi republics. These agreements were based on German export financing under a Hermes guarantee based on barter. The cooperation programmes also include investment projects. Several large Russian regions have drawn up promising cooperation programmes with German partners. Certain members of the Russian Federation conducted a presentation of their regions, along with their cooperation projects, in Germany.
The sixth session of the Advisory Council in Yekaterinburg (May 1997) addressed the issue of stepping up regional economic cooperation. Yekaterinburg was chosen as the site for holding the Council meeting in order to increase the significance of this cooperation and use the example of the Sverdlovsk region to look into the validity of the credit and barter agreements signed at one time by eight Russian regions with the German Federal Department of Special Assignments.
Prospects. Germany favours further liberalisation of international trade, removing the long-standing non-tariff barriers, and achieving greater access of goods, services and capital to the world markets. The Germans believe it is advisable to develop a set of measures to protect and liberalise foreign investment regulations and are against restrictions that curb competition.
The German government is in favour of developing and strengthening mutually advantageous economic relations with Russia, and achieving greater access of Russian goods to the European market based on the Agreement between the EU and Russia. Germany supported extending general preferences to Russia with respect to access of Russian products to EU markets. In July 1997, at a colloquium, Russia: What Is to Be Done? (attended by Russian Prime Minister Viktor Chernomyrdin) in Berlin, German Chancellor Helmut Kohl spoke of the possibility of Russia joining the EU as an associated member, which could ultimately lead to the creation of a joint free trade zone.
At present, Germany views Russia as an equal partner of the world's leading industrially developed countries.
However, despite the basically favourable trade policy conditions, there are several serious obstacles blocking the access of Russian goods to the European market:
On the other hand, trade policy conditions now in effect in Russia also have their negative aspects and affect the development of economic and trade relations with Germany. They boil down to the following: political and economic instability, the slump in production and, correspondingly, the drop in export potential, financial currency deficit, instability of foreign economic legislation, unfavourable investment climate, high level of economic crime, high level of taxes, transportation, power and other tariffs, low quality and narrow range of export commodities, and emphasis on raw materials in exports. At present, measures are being taken in Russia to change the situation in all these directions, including through amendments to the legislation.
In 1998, Russian and German partners will continue working to strengthen the contractual and legal foundations of economic cooperation, and improve the trade policy conditions and investment climate. Such steps could include the following:
Agreements. The basic legal document for economic and trade cooperation with Germany is the Agreement between the USSR and the FRG of 25 April 1958 on general issues of trade and navigation, which regulates economic, commercial and legal terms of trade and sets forth, in particular, the reciprocal granting of most favoured nation treatment. Further agreements and treaties specify individual aspects of economic relations. Among them are the following: a Treaty on the Promotion and Mutual Protection of Investments (of 13 June 1989), the Treaty on the Development of Broad Cooperation in Economics, Industry, Science and Technology (9 November 1990), and the Agreement on Good-Neighbourly Relations, Partnership and Cooperation (9 November 1990).
Russia's legal succession was confirmed in a joint statement on the results of President Yeltsin's visit to Germany in November 1991. In 1991-97, other agreements with Germany were signed, including on cooperation in transportation, environmental protection, power plant safety, foodstuffs, and agriculture. In March 1996, an intergovernmental protocol on implementation of the Yamburg Agreement of 20 January 1986 was signed. A new double taxation agreement was signed on income and property tax (of 29 May 1996), as well as an Agreement on Rescheduling the Foreign Debt of the Former Soviet Union (consolidation IV) of 5 February 1997. An Agreement on Technical Cooperation is at the preparation stage.
During the summit Russian-German consultations on 8-9 June 1998 in Germany (Bonn), agreements were signed on cooperation in the coal, nuclear and aviation industries.
An agreement on partnership and cooperation between Russia and the EU recorded the current trade policy terms between Russia and Germany, and sets forth obligations for the EU countries with respect to further liberalisation of trade with Russia. The general system of preferences for Russian exports is still applied, although it has undergone significant changes. The scope of preferences will gradually decrease. Moreover, protective measures are also in effect: anti-dumping procedures and quotas, including with respect to Russian steel products. In addition, non-tariff restrictions are becoming an increasingly serious obstacle to Russian commodities, in particular mechanical engineering products; strict rules and standards are in effect, primarily with respect to safety and environmental friendliness. Although the COCOM system was reorganised, strict control regulations have been established in Germany over the export of military and dual-purpose commodities, and responsibility for observing them has been enhanced.
The main German banks playing a leading role in the development of trade relations between Russia and Germany are Deutsche Bank, Dresdner Bank, Commerzbank, Kreditanstalt fur Wunderaufbau (a credit institution for restoration), Ost-West-Handelsbank, and AKA (Ausfuhrkredit). These financial institutions play an active role in granting credit for deliveries from Germany to the Soviet Union, and now to Russia, and in financing large-scale cooperation projects with German companies.
The Russian Trade Mission in Germany, the Department of Economy and Science provides information on cooperation with Germany at the German embassy in Moscow, as well as special information centres, and the mass media. These include the Federal Department of Foreign Economic Information in Germany and a special departmental newspaper Nahrichten fur Dusenhandel, in which hundreds of proposals and requests from Russian participants in foreign economic cooperation are published with respect to trade, services and investment cooperation. The Russian Trade Mission in Germany publishes a monthly Bulletin of Economic Information.
According to the Russian State Statistics Committee figures, as of 1 July 1998, the accumulated volume of German investments in the Russian economy amounted to US billion, or 32.6% of the total volume of all accumulated foreign investments in Russia. According to this indicator, Germany is ranking first among large investor-states operating on the Russian market.
The figures on investment activity on the Russian market of the ten largest investor-states on 1 July 1998 are given in billions of dollars, and the percentage of the investor-country in the total volume of accumulated foreign investments is given in parentheses, in %: Germany – 8.74 (32.6), US – 4.40 (16.4), France – 3.31 (12.4), Cyprus – 2.50 (9.3), Great Britain – 2.31 (8.6), Italy – 2.06 (7.7), Sweden – 0.41 (1.5), Japan – 0.40 (1.5), Switzerland – 0.36 (1.3), and Finland – 0.29 (1.1).
According to the State Registration Chamber of the Russian Ministry of the Economy, as of 1 October 1998, more than 1500 Russian-German enterprises and organisations founded with German capital were entered into the Russian Company Register. Forty-two per cent of them are limited companies, 30% are joint-stock companies, and 28% are organisations with 100% German capital. There are 584 representative offices of German firms operating in Russia.
Fifty percent of these joint ventures are engaged in commercial and broker, consulting and information services (50%), financial operations (15%) and the rest are involved in oil production, metallurgy, the chemical and light industries, conversion, transportation, the manufacture of consumer goods, etc.
Russian-German investment cooperation in the largest projects is carried out in the following areas:
Oil production. Several large oil production projects are being implemented. For example, the German Deminex Company and Ninzhnevolzhskneft Production Association have founded the Volgodeminoil Joint Venture for exploration and development of hydrocarbons in the Volgograd region. The authorised capital of Volgodeminoil amounts to US million. The founders of the joint venture have invested approximately US million. In 1998 and the next few years, there are plans to attract up to US million in investments per year. Taking into account that the enterprise has the status of a pilot project of Russian-German cooperation in the oil and gas industry, the Russian Fuel and Energy Ministry, with the consent of the Russian Ministry of the Economy, incorporated, by way of exception, essentially the entire output of the company into the oil export schedule for 1997.
Members of the joint venture are Lukoil Nizhnevolzhskneft – 25%, Deminex Volga Petroleum – 50%, and Lukoil International – 25%. By 1 January 1998, the following amounts of oil (recoverable) were recorded on the JV's balance: 7,210,000 tons of C1 category and 1,295,000 tons of C2 category. Thirty-eight prospective structures have been discovered and 9 prepared.
In August 1998, work began on surveying hydrocarbons in new licensed sections. In May 1996, the Volgodeminoil JV obtained its first oil. By 1 January 1998, accumulated production amounted to 399,000 tons, at a daily rate of 1,210 tons. Forty-six million cubic metres of casing-head petroleum gas have been extracted.
The Volgodeminoil JV is increasing its investments every year and plans to double the amount of high-risk survey boring in 1999 compared with 1998, bringing it to 15,100 m by the year 2000.
In 1998, on the basis of conclusions made by experts of the Russian Fuel and Energy Ministry and Russian Economic Ministry, the inter-departmental commission for resolving problems relating to the granting of access rights to the export transportation oil pipeline network granted Volgodeminoil JV the privilege of access to the pipeline system for exporting 60% of its output.
Slavneft-Yaroslavnefteorgsintez public company is planning to enter into a contract with Thyssen Technik and Mitsui (Japan) for building a catalytic reforming complex using a loan from Eximbank of Japan for 23.8 billion yen.
In 1996, Slavneft-Mozyrsky Oil Refinery made a credit agreement for 50 million DM through the German engineering company Industrianlagenbau for the purchase of equipment to reconstruct a catalytic reforming installation. By now, delivery and reconstruction of the installation have been completed.
With the participation of Industrianlagenbau, a loan of 42.5 million DM has been obtained for purchasing equipment for hydroconversion of vacuum distillate, and the hydrogen concentration and vacuum distillation of petroleum residue.
The Mozyrsky Oil Refinery, in cooperation with the Linde Company, is developing a basic project for a hydrogen concentration installation and the purchase of necessary equipment. Project documentation and a proposal have been received from Lurgi-Anlagenbau-Chemnitz for the construction of a catalytic cracking installation (import purchase volume of US million).
In 1996, Slavneft-Mozyrsky Oil Refinery made a contract with the German Degussa company for extracting precious metals (platinum, rhenium) from a processed reforming catalyst for preparing new catalysts for the Duallforming process.
In December 1996, a credit agreement was signed with Dresdner Bank for US million with a possible increase to US million in 1997. At the same time, a contract was signed with the Select Energy Trading company for the delivery of 1 million tons of crude oil to Germany.
Slavneft and its subsidiaries are cooperating in the field of production, research and technology with such German companies as Lurgi, Thyssen Technik, Romantis, Duffner Instrumente, Dragerwerk, Greis, BASF, Hoechst, and others.
The Russian YUKOS oil company is showing interest in obtaining a loan for completing construction of a high-octane fuel production complex at the Novokuibyshev Oil Refinery. A contract for the delivery of a purification and secondary distillation installation was made as early as 1993 with the Salzgitter Anlagenbau Company. However, financial difficulties have put a hold on payments under the contract. Eighty million DM is needed to implement the contract.
Surgutneftegaz is responsible for coordinating oil deliveries to Germany. In so doing, it has the task of conducting a coordinated price policy of Russian exporters in order to increase their hard currency proceeds, thus creating conditions for the maximum loading of Russian oil pipelines, and preserving and expanding sales markets.
In 1997, approximately 13.5 million tons of crude oil were delivered to the German market via the Druzhba oil pipeline, which is more than 97% of the 1996 level and 10.65% of Russia's total exports. From January to August 1998, oil exports to Germany dramatically increased, reaching 12.3 million tons in 8 months, or 120% of the corresponding period of the previous year, and 13.6% of Russia's total exports.
Compared with other western oil refineries, the plants in Schwedt and Leine are considered unprofitable. They have to operate under competition from local petroleum manufacturers, and the possibility of buying oil from alternative sources, such as the North Sea countries, Algeria, Iran, and recently Iraq, including the possibility of delivering this oil through Poland, is leading to tough competition on the German market as a whole.
Germany is traditionally the largest importer of Russian gas. It accounts for more than 40% of all the deliveries of Russian gas to Western Europe.
Gazprom. It delivers natural gas to Germany through Ruhrgas, Wintershalle Erdgas Handelshaus, and Verbundnetzgas. As of 1 January 1998, the total volume of deliveries of natural gas from Russia amounted to 480 billion cubic metres. During the first eight months of 1998, 20.1 billion cubic metres were delivered, or 98.6% compared with the same period in 1997; this is 15.73% of Russia's total gas exports.
Ruhrgas imports natural gas from Russia, Holland, Norway and Denmark, thus providing approximately 70% of the total volume of gas supplies to the German market. Ruhrgas also ensures the transit of Russian natural gas deliveries to France.
Natural gas is supplied to Ruhrgas under seven long-term, until 2008, contracts for 20 billion cubic metres per year.
Ruhrgas plans to buy approximately 3 billion cubic metres of natural gas under a new contract within the framework of the Yamal-Europe project. Negotiations are being held to discuss the possibility of using Ruhrgas's existing gas transportation system, as well as cooperating in the laying of new gas pipelines.
Verbundnetzgas is the main gas transportation company in the former GDR. Natural gas is supplied from Russia under an agreement on development of the Yamburg gas deposit of 20 January 1986. The agreement sets forth the supply of gas until 1999. In 1997, 3.5 billion cubic metres were supplied. Upon completion of gas deliveries under the agreement, they will be continued under a contract with WIEH Trading House.
The Wintershalle Erdgas Handelshaus Company (WIEH, WINGAS), or the WIEH Trading House, is a joint venture of Gazprom and Wintershalle (a subsidiary of the BASF concern) with a 50% Gazprom interest. A contract singed in 1992 stipulates deliveries by the Trading House to Germany of 13.5 billion cubic metres of gas a year until 2012.
The total deliveries of Russian gas by the trading house set up with Wintershalle amount to 20.5 billion cubic metres of gas a year.
The joint efforts of Gazprom and Wintershalle have resulted in the construction and exploitation of two major gas pipelines in Germany: STEGAL, which is 323 km in length and has a production capacity of 8 billion cubic metres a year, and MIDAL, which is 642 km in length and has a production capacity of up to 12.9 billion cubic metres a year.
In order to ensure the reliability of deliveries to Western Europe, Gazprom and Wintershalle are using an underground storehouse in Reden (Germany), which they plan to expand from 2.5 to 4.2 billion cubic metres of lift gas in 1998.
Gazprom is selling gas directly to consumers in Germany, thus achieving a significantly higher profit compared with the previous terms when gas had to be handed over at the border.
As a result of the development of new forms of cooperation, Gazprom owns 35% of property in Germany, including gas pipelines, gas transportation and distribution networks, gas storehouses, and compressor stations, which guarantees success and ensures significant profits. This property was purchased using additional profit from the sale of gas on the German domestic market and is estimated at a total of 1.6 billion DM.
Beginning in 1999, there are plans to deliver 2 billion cubic metres of Russian gas, with a gradual increase to 10 billion cubic metres, under the new Yamal-Europe contract.
Construction of the Yamal-Europe gas pipeline system is going on in Russia. Gazprom plans to put 340 km of linear pipelines in the Torzhok-CS Smolenskaya section and 182 km in the Berezina River-CS Nesvizh section into operation in 1998. Construction of the entire system of export gas pipelines is planned to be completed by 2005.
The Yamal-Europe project includes the construction of a two-line gas main network with a total length of more than 4,000 km for each line. In the first place, the first line of the main will be constructed, which will pass through Russia, Belorussia and Poland to the German border.
In order to ensure financing of the gas pipeline construction project, a credit agreement for 1.3 billion DM was signed in 1995 between Gazprom and a consortium of 27 German companies and European banks. In 1996, a credit agreement for 1 billion DM was signed between Gazprom and Wintershalle.
Research and technology. For several years, Gazprom has been successfully cooperating with Ruhrgas in the corrosion protection of gas pipelines, the optimisation of operating conditions for gas-pumping installations, traffic control, and other fields.
A computer programme offered by Ruhrgas for modelling the Uzhgorod Corridor helped to save an annual 5% in energy consumption for the Volgotransgas system; 1,400 km of gas pipelines were jointly checked.
Rosgazifikatsia is cooperating with German companies engaged in design, construction and operation of gas pipelines, manufacture of gas-using and auxiliary equipment, raw materials, instruments, rendering engineering and consulting services, etc.
Within the framework of an agreement signed in 1992 with Ruhrgas, German partners checked anti-corrosion systems in municipal gas distribution networks and compiled all the necessary documentation for their reconstruction in several Russian cities. The situation on the heat market in Vladimir, Rostov-on-Don and Stavropol was selectively analysed, where a large gas-saving potential has been revealed. For demonstrating the possibility of saving up to 48% of gas with the help of Ruhrgas in these cities, three apartment buildings were fitted out with German equipment and transferred from central to autonomous heating.
In 1995-96, Ruhrgas in association with other German companies made a feasibility study for improving the economic conditions of the gas supply system in Nizhny Novgorod, Samara, Stavropol and the Vladimir region, which would meet the requirements of the World Bank for Reconstruction and Development. All the work under the agreement, as well as under the Energy Economy programme, is being carried out by Ruhrgas free of charge with a view to further cooperation and purchasing the gas thus saved.
Another important direction in the field of gas supply is research and incorporation of new techniques, equipment and know-how in the modernisation of obsolete gas pipelines and liquefied gas filling stations, etc.
A great deal of attention is being paid to the programme for introducing polyethylene into the construction of gas pipelines. In 1995-96, the RMC Munich company purchased state-of-the-art technological equipment for the modernization of production lines of gas polyethylene pipes of various diameters. At present, a pipe-manufacturing plant operates in Kazan.
The coal industry. The Ministry of the Economy of North Rhein-Westfalia has made a decision to grant technical credit in the form of equipment manufactured by local companies for 170 million DM. A relevant draft Framework Agreement between the Russian Fuel and Energy Ministry and the above-mentioned German land ministry has been prepared for signing (Russian Government order of 6 September 1998).
The Leninskugol, Kuznetskugol and Severokuzbasugol coal companies of the Kemerovo region have been selected as a pilot project for obtaining this equipment for 170 million DM.
Negotiations are going on within the Russian-German working group for coal on attracting German federal credit to purchase mining equipment for the coal companies of Kuzbass, Rostov, Vorkuta and Inta.
Metallurgy. Investment cooperation is developing with such German companies as Schliemann Siemag, Siemens and Sket GmbH.
The Magnitogorsk Metallurgical Combine and the Schliemann Siemag and Siemens companies are implementing a project on the construction of a 2000 cold rolling mill in Magnitogorsk which would cost a total of 1 billion DM. Since the contract was signed, the Schliemann Siemag company received from the combine 113 million DM as an advance payment.
Due to the unstable financial situation of the combine, its management is looking for funds to borrow for implementing the project. In December 1996, a credit agreement on financing by a consortium of German banks headed by Dresdner Bank was ratified for the delivery of equipment for the 2000 mill in the amount of 956 million DM at 4.3% per annum against export deliveries of the combine's metal products.
The Stary Oskol metallurgical plant is considering a possibility of its modernisation with the help of the Sket company.
The largest German companies, Mannesmann, Lurgi and Mag, are reviewing the possibility of investing capital in modernising metallurgical plants in Chelyabinsk, Elektrostal and Volgograd.
The Motor-Car Industry. Cooperation is developing between Russian enterprises and such German companies as Mercedes-Benz, Daimler-Benz, Adam-Opel, Deutsch, Volkswagen, etc.
Mercedes-Benz and Ulyanovsk Automobile Plant have developed a business plan for organising automobile manufacture, including diesel engines, low-tonnage vehicles and family jeeps. The cost of the project is estimated at 1.2 billion DM, including the 500 million DM share of the foreign partner.
The sides approved a basic agreement on the founding of a joint venture for the production of diesel engines. The German side will analyse the financial situation of UAP as the monopoly consumer of its output.
The German automobile concern Adam-Opel and Avtovaz in Togliatti have begun implementing a large-scale investment project for the construction of a car-assembly enterprise with a capacity of 50,000 Opel Astras a year. At present, the parties are developing a plan for financing the project.
Daimler-Benz participates in the Nizhny Novgorod bus programme for manufacturing Mercedes double buses at the Arzamas Machine-Building Plant. In 1997, the enterprise put out approximately 100 buses.
Volkswagen and Skoda Auto are holding negotiations on the founding of a joint venture with Izhmash for organising the manufacture of modern cars. Implementation of this project will make it possible to manufacture 180,000 modern cars a year (such as Felicia, Octavia), and at the second stage 500,000 engines a year. This project envisages transferring a 51% block of shares to Skoda Auto, the controlling stake in which belongs to Volkswagen. Equipment deliveries, modernisation of production, payment for know-how and settlement of credit debt, etc. will be thereby secured to a total of 487.8 million DM out of the funds of Skoda Auto.
The German company Deutsch and Uralaz founded Deutsch-Ural-Diesel joint venture for the assembly and sale of diesel engines adapted for vehicles operating in the extremely difficult conditions of the Far North, Siberia and Russian Far East.
The chemical and petrochemical industry. Several large investment projects are being implemented with Henkel, Textima, Reifenhauser and EMS-Inventa Anlagenbau, including: Henkel has founded a joint venture in Tosno with the Era Production Association and synthetic detergent plant (Engels) for the manufacture of highly efficient laundry detergents; the Textima company has founded a textile thread manufacturing facility with a capacity of 13,000 tons a year in Tver; the EMS-Inventa Anlagenbau has founded an enterprise for manufacturing polyamide threads with an output capacity of 2,000 tons in Volzhsk at Khimvolokno; the Reifenhauser company participates in multi-layer polymer film manufacture at Plastik company in Dzerzhinsk.
The pharmaceutical industry. The Pharmaplan company is participating in the production of ready-made medications in tablets and phytoextracts at pharmaceutical enterprises in Chelyabinsk, Kazan and Stavropol.
Transportation. A project for joint construction of the Moscow-Minsk-Warsaw-Berlin highway is being implemented. It is included in the trans-European network of priority transportation corridors. The representatives of interested countries (Russian, Belorussian, Polish and German Transportation Ministers), as well as representatives of the Commission of European Communities, signed a memorandum on the improvement of traffic conditions along this corridor. Repair work is to be completed before the end of 1998 on the Moscow-Berlin highway on Russian territory using the resources of the Federal Road Fund and funds borrowed from the World Bank.
Reconstruction of communication systems. Siemens, in cooperation with the Sumitomo company (Japan), is participating in a project to create a fiber-optical and radio-relay communication network in Russia, to be completed in 1999. The cost of the supplied equipment exceeds US million. A fiber-optical communication line, Moscow-Port Nakhodka, has been commissioned.
Siemens is supplying commutation equipment to many Russian regions under contracts with local communication companies.
One of the main directions in further cooperation with Siemens is the formation of a digital network in Russia based on the operation of 50 regional international telephone stations and 50,000 km of digital intercity lines (50x50 project).
Siemens, jointly with Izhevsk automobile works, organised the manufacture of small city and office telephone stations at conversion facilities.
Aviation and space technology. Within the framework of the Russian-German working group, negotiations are underway on Germany's participation in the production of a military freight airplane AN-70. Manufacture of the airplane will be organised at Aviakor in Samara. According to the order of the Russian President and the Government on the joint manufacture of AN-70 by Russia, Germany, France and Ukraine.
Power engineering. Cooperation with Germany in power engineering involves RAO EES of Russia (Unified Power Grid). The main direction is the development of production at Russian plants of power engineering and electrical equipment, previously not manufactured in Russia, using more economical and harmless processes designed by German companies.
Asea Brown Boveri (ABB): in September 1993 RAO EES signed a General Agreement with ABB on power engineering. As of present, ABB has founded 20 joint ventures in Russia, 15 of them specialising in power engineering.
The priority cooperation agreements between regional power plants and ABB are the following:
Siemens: in December 1993, an agreement on long-term and mutually advantageous cooperation between RAO EES and Siemens KWU/EF was signed which sets forth the guidelines of cooperation, such as: gas-turbine and steam gas installations, power substations, measurement systems, and production process automated control systems.
Within the framework of this agreement, several projects and contracts are carried out with regional power plants.
Several joint ventures have been founded in St. Petersburg, Moscow, and Perm with Siemens for the manufacture of parts for gas turbines with a capacity of 150 mw, production process automated control systems for power stations and high-voltage cables.
Work continues on the foundation of new joint ventures with Siemens and Russian plants manufacturing electrical equipment, including in Nizhny Novgorod, Yekaterinburg and Kursk.
In 1996, the Siemens company realised orders in Russia amounting to 36 million DM, or a mere 10 per cent of the joint venture development plans, which is explained by the low paying capacity of the customers (power plants).
Preussen Elektra: a priority sphere in the mutual economic interests of RAO EES and Preussen Elektra is creating an East-West energy bridge, as a vital part of the Baltic Circle project.
The Baltic Circle project is based on the idea of uniting the energy systems of the coastal states of the Baltic region and creating an electricity network for their interaction on a mutually advantageous basis.
The bulk of the feasibility study of the East-West power supply line was made in 1992-94 using funds provided by the participant countries. The Baltic Circle project is part of the EU Trans-European Networks Programme (TACIS and FARE programmes).
RWE: an agreement on cooperation in power engineering and electrification between RAO EES, Mosenergo and energy-supplying enterprise RWE Energy was signed in December 1994. The agreement sets forth the development of mutually advantageous cooperation in energy supply, the exchange of know-how, joint development and implementation of promising and economically efficient power engineering projects, as well as the exchange of experience in informatics and telecommunications, tariff formation, accounting, the issue of securities, personnel training, shareholding in companies and/or the founding of enterprises.
Russian-German inter-regional relations. Seventy pairs of Russian and German cities are developing cooperation on the basis of partnership agreements. Fourteen of sixteen German lands have entered into 30 agreements on the development of partnership relations with 15 Russian regions. For example, the federal land Baden-Wurttemberg is extensively cooperating with the Sverdlovsk and Leningrad regions; Saxony with Tatarstan and Bashkortostan; Brandenburg with the Moscow and Kaliningrad regions; Lower Saxony with the Tymen, Perm and Omsk regions; North Rhein-Westfalia with the Nizhny Novgorod, Kostroma, Leningrad and Volgograd regions and Altai territory, and Berlin with Moscow.
The main goal of the agreements is to strengthen direct economic ties and, in so doing, ensure support of the market reforms in Russia at the regional level.
The degree of industrial development and economic attractiveness of a particular Russian region is the most significant aspect for German lands in choosing partners and cooperation projects, a determining factor here being the specific investment interests of German business, for example, in industrially developed Russian regions or those with rich natural resources. Availability of a transportation network, social amenities and the relative geographical proximity of the region are also important.
The Russian regions with major German investment presence include Moscow, St. Petersburg, the Moscow, Leningrad, Nizhny Novgorod, and Tyumen regions, as well as Kaliningrad, in which the Germans traditionally have been interested.
The development of cooperation in scientific-research and technology, in higher and secondary education, cultural and sports exchanges, international tourism, and Russian and German language courses are incorporated in the plans for partnership ties between Russian and German regions and cities. In several cases, primarily on the initiative of the German side, contacts are being established between the legislative agencies of the Russian regions and the German federal lands.
Cooperation is financed by the Germans primarily out of the land budgets, although funds are also allocated from the federal budget. For example, almost 2/3 of a government programme of consultation and technical assistance to East European countries (Transform), under which 40 million DM were allotted in 1998 to projects in Russia, is concentrated on the Russian regions.
The public organisation which coordinates the efforts of land, city and communal associations for the development of cultural, scientific and information ties with Russia and other former Soviet republics—the West-East Federal Union of German Societies—reappeared in Germany in October 1996. Its objective is to coordinate the efforts and initiatives of German societies operating in the area of international information and cultural ties, preparing and holding various undertakings at an inter-regional level, as well as conferences and symposia aimed at increasing mutual understanding and trust between the people of Germany and the former Soviet republics. The organisation is financed by membership fees paid by societies and associations.
Several Russian regions are willing to open their representative agencies in Germany. Today, the Novosibirsk region (Frankfurt-am-Main), Altai territory (Berlin), the Tver region (Cologne), and the Kaliningrad region (Hamburg) are represented in Germany. The issue of opening a representative agency of the Nizhny Novgorod region in Dortmund is being discussed. Along with the main, economic, aspect of their activity, these representative offices are also acting as information bureaus. Representative agencies of Russian regions usually appear at German companies where their heads are employed, frequently without any agreement between the Russian regions and German lands (there was an attempt to open representative offices of Ingushetia and Tuva on this basis). Their status is not regulated by bilateral Russian-German documents or German domestic legislation, therefore the German authorities do not regard them as official representatives of Russia’s regions.
Russian-German scientific and technical cooperation: results for 1997. Scientific and technical cooperation is based on an intergovernmental agreement of 22 July 1986 and four inter-departmental, six specialised, and over 100 agreements on individual projects which cover a wide range of current problems of fundamental science, applied research, and specific projects.
Cooperation with Russia is attractive for the German side in terms of the possibility of using Russian scientific potential and advances in research and technology in order to maintain the level of fundamental science, as well as to maintain the competitiveness of its industry by means of reducing the time of creating “critical technologies of the 21st century”, and new types of high-tech products, goods and services (multimedia, biotechnology, environmental protection techniques).
Taking into account the critical state of science financing in Russia, the German side is granting Russian scientists involved in cooperation free material and financial resources necessary for coordinated research programmes. In 1997, the German side spent 2 million DM on these purposes, including on research in laser technology (674,000 DM), biotechnology (374,000 DM), marine and Arctic research (303,000 DM), and fundamental physics (274,000 DM). In addition, 715,000 DM were spent on the development and bringing the Russian scientific information network and scientific and technical information system in line with world standards.
The Germans are still extremely interested in cooperating with Russian organisations in the field of space research (in the area of microgravitation, remote probing of the Earth from space, manned flights). Funds for cooperation in this area are allotted directly from the national research programme of the Federal Education, Science, Research and Technology Ministry (BMBF). Cooperation in the sphere of biotechnology and environmental techniques (the Oka-Elbe project) is also primarily financed out of national research programmes, which means that these programmes essentially depend on the Russian partners and demonstrate a high level of mutual trust.
As a rule, the German side is interested in conducting large-scale joint experiments using its scientific equipment in Germany. Participation of Russian scientists in such experiments ensures fuller loading of the equipment and the employment of support personnel, and provides German researchers with greater knowledge, experience and working methods of their Russian colleagues. In particular, with respect to the construction of the BESSI-II synchrotron in Berlin, the German side wants the Russian side to be involved in the creation of a synchrotron radiation outlet channel for joint experiments and has already announced the allotment of 270,000 DM for this purpose.
An important result is the decision made in Bonn in November 1997, on the initiative of the Russian side, by the co-chairmen of the Joint Russian-German Commission on Scientific and Technical Cooperation to expand interaction in the sphere of technology transfer, development of innovations, and commercialisation of scientific research results.
Russian-language newspapers published in Germany. In recent years, several Russian-language newspapers have appeared in Germany, a new phenomenon for the country. Due not only to the migration of approximately 1.5 million Russian-speaking ethnic Germans from the former Soviet Union, but also by a keen interest in Russia.
On 20 February 1997, one of the leading Russian dailies, Izvestia, began to come out in Frankfurt-am-Main with a circulation of 10,000 copies. There are plans for Germany to become the main foreign sales market for Izvestia, if it can survive the relatively tough competition among the numerous Russian-language newspapers, which have already established themselves there. Among the most popular of these is Vostochny ekspress (Orient Express, circulation 30,000 copies) published in Alen for Russian-speaking settlers living in North Rhein-Westfalia and Lower Saxony (a total of 34% of the Russian Germans).
Twice a month, the newspaper Kontakt (Contact) with a circulation of 50,000 to 60,000 copies and 30,000 subscribers comes out in Hannover. Nemetsko-rossiiskaya gazeta (German-Russian Newspaper), published in Munich and Zemlyaki (Compatriots), a free information and advertising newspaper which comes out in Neufeld, are also intended for the Russian-speaking settlers. The Russian weekly Argumenty i fakty (Arguments and Facts) published in Russia with a circulation of more than 3.3 million copies distributes in Germany 30,000 copies of its special supplement, My v Germanii (We in Germany).
Approximately a dozen Russian-language newspapers published in Germany are intended not only for Russian settlers, but also for over 120,000 Jews from the former Soviet Union who resettled in Germany under special quotas or “on the way to Israel”. The following newspapers are published in Berlin for this group of the population: since 1993, Evropa-Tsentr (Europe-Centre), twice a week with a circulation of 40,000 copies; since 1996, the Russkii Berlin (Russian Berlin) weekly. 18,000 copies; and Novaya Berlinskaya Gazeta (New Berlin Newspaper), 5,000 copies. Since 1996, Vedomosti (Gazette) has been coming out twice a month in Dortmund with a circulation of 28,000 copies.
The nature of the Russian-language newspapers published in Germany varies. Some are meant for rendering moral support to migrants as they are getting used to their new home, they provide helpful legal advice on German laws and regulations, and German traditions. Others focus mainly on Russian-Jewish topics (for example, the newspaper Krug (Circle) published in Cologne) or deal with the situation in Russia. A small number of newspapers try to form a “new cultural self-awareness in Russians living in Western Europe”. In order to survive on the Russian-language newspaper market, most of them strive for a great deal of diversity; news is usually published without reference to the information source, and reprinted articles and photographs are reproduced without any reference to their authors.
Customs. In Germany, as a member-state of the customs union of EU countries, the import of goods from and export to third countries are regulated by EU resolution 2658/87 of 23 July 1987 on uniform customs tariffs, as well as various corresponding national regulations and instruments.
Movement of goods within the EU by member-states of the community is duty-free. Export duties and taxes on the borders of EU countries essentially do not exist. Export duties are only levied on the export of certain goods produced within the grain market in the EU. For example, a duty of 30 ECU per ton is levied on the export of certain types of hard wheat.
Goods imported into the customs territory of the EU from third countries go primarily into economic circulation under legally imposed import taxes and fees (customs duties, import turnover tax and, if necessary, other consumer taxes).
In many cases, goods are exempt from import taxes and duties for various reasons. This exemption may be recorded in the customs tariff (in which case the commodity is stamped “duty free”) or under relevant EU resolutions, international agreements and/or in cases set forth by national laws.
In addition, goods temporarily imported to the EU customs territory, which do not enter into economic circulation in the European Union countries, are exempt from import taxes and fees.
Import duties are calculated on the basis of the customs value of the commodity. Usually, it consists of the price actually paid or the price that should be paid, including insurance and shipment costs to the point of entry into the EU customs territory.
Import turnover tax is calculated on the basis of the value of goods (including the above shipment and delivery costs plus customs duties).
Customs duty on goods imported into Germany by passengers is regulated by a special order on customs duty exemption (Zollbefreiungsverordnung No. 918/83).
Quotas on duty-free goods apply to tobacco and cigarettes, alcohol, coffee and perfume. For persons entering Germany from third countries, the following duty-free quotas have been fixed:
In the event such items are imported into Germany from third countries in excess of the established duty-free quotas, the following duties are levied: coffee beans – 7.4 DM per kg; instant coffee – 20.3 DM per kg; sparkling wine – 4.8 DM per litre; liqueurs, vermouth and other aromatic wines – 2.1 DM per litre; strong alcoholic beverages – 13.4 DM per litre; cigarettes – 0.21 DM each.
If commodities totaling no more than 350-420 DM and not intended for commercial purposes are imported into Germany from third countries, a lump sum is levied in the amount of 20% of their aggregate cost.
A lumpsum fee of 10% of the cost applies to goods from countries with which Germany has preferential agreements (this applies to Russia); this fee is 20% on wines and other agricultural products.
If the aggregate cost of goods imported into Germany exceeds 420 DM, a lumpsum fee is not levied, instead the corresponding duty and import turnover tax in effect are applied to each type of commodity. With respect to goods from countries with which preferential agreements have been signed, only the import turnover tax is paid, but in so doing evidence must be furnished to show that the commodity originated in the country with which a preferential agreement exists. An oral statement that the commodity originated in the country with which such an agreement has been signed is sufficient if the total amount does not exceed 2,350 DM for Israel, Iceland, Liechtenstein, Norway, and Switzerland; 2,100 DM for Bulgaria, Hungary, Poland, Romania, the Czech Republic, and Slovakia; 500 DM for Estonia, Latvia and Lithuania; and 1,200 DM for all the other countries (including Russia). In other cases, corresponding documents must be submitted as proof and an import tax of 15% paid (7% on agricultural products, books, postal stamps, etc.).
The personal property of people emigrating to Germany fall under special regulations, apart from alcoholic beverages, tobacco and coffee (above the established quotas), industrial means of transportation, as well as machine-tools and equipment for commercial activity. Personal property may be imported duty-free in an unlimited amount. A migrant from a third country also has the right to import one personal car duty-free. A customs duty of 10% of the cost and import turnover tax of 15% of the cost of the car, including the customs value, are levied on all additional personal cars purchased abroad and imported into the EU customs territory.
Diplomats from third countries have the right to import cars for personal and business use into Germany duty-free. Tourists from third countries may enter Germany in their personal cars (without paying any duty) on the condition they also leave the country in them.
German and EU customs and other relevant legislation do not envisage any other benefits for the import and export of personal goods across the EU customs border.
The import of commercial goods into Germany from third countries is regulated by the above-mentioned EU resolution on uniform customs duty. There is no difference in customs payments for individuals and legal entities.
Customs duties on imported goods are divided into the following: cost (ad valorem), envisaging a duty in a specific amount (per cent) of the cost of the goods; and specific, based on fixed cost rates for a certain quantity of goods.
Compound (mixed) duties can also be applied, i.e. by combining both basic types of customs duty. Germany is a country which mainly uses ad valorem duties.
The current customs tariff sets forth the following types of rates: automatic rates (applied to goods imported from third countries with which there is no agreement on preferential rates); preferential duties (levied on goods produced in countries to which preferences apply); contingent duties (fixed for quota goods; a lower duty is levied until the set volume of the particular commodity is exhausted); anti-dumping duties (set by the EU Commission for a specific time if a dumping price is confirmed for a particular commodity from third countries).
Depending on the country, customs duties in the current customs tariff are divided into three main groups. The customs duties in the first group are levied on goods imported from countries to which most-favoured-nation regulations apply (this essentially applies to all the countries of the world). The second group consists of preferential customs duties levied on goods imported from countries pursuant to a special EU decision (since 1994 this applies to certain goods from Russia). The third group consists of so-called special customs duties. They apply to goods imported from countries and territories of certain EFTA member-states associated with the EU, several African countries, and certain Mediterranean, Caribbean and Pacific states.
The rates of import duties within the EU on certain goods fluctuate depending on the situation on the world market and the needs of EU member-states.
Under effective legislation there are no restrictions on the import and export of currency, all payments abroad may be made without any restrictions by any person regardless of the currency, amount and nature of a transaction. The law permits restrictions on transactions involving gold, its import or export, in order to prevent any damage to the purchasing power of the Deutsche Mark or to maintain the country's payment balance. The Federal Bank of Germany has exclusive jurisdiction over the flows of capital, foreign exchange payments and transactions.
It is also stipulated that all German individuals and legal entities should inform the competent authorities of all payments in excess of 5,000 DM (or the equivalent in foreign currency) by filling out a special form, if they receive such payments from foreign citizens or transfer them abroad. These include payments in cash, by check or promissory note, the transfer of Deutsche Marks or foreign currency through credit institutions, offset of counter claims and recalculated settlements. In addition, individuals and legal entities are required to submit monthly reports on the overall state of claims or liabilities to foreign citizens, if they exceed 500,000 DM a month, or the equivalent in foreign currency.
Payments of less than 5,000 DM, revenues from the export of German goods, the provision, receipt and return of short-term loans, and amounts placed to or received from short-term deposits should not be declared.
Special regulations apply to the import of such items as weapons and ammunition, certain types of medicines, narcotics, works of art and items of high artistic value, and items intended for exhibitions and fairs. Special regulations apply to the import and export of give-and-take raw materials, and commodities delivered to replace defective items. The German customs services also monitor observation of the health protection and veterinary regulations, including the necessary certificates for pets and plants, as well as the amount of medicaments and certain foodstuffs imported by passengers (in particular, in amounts not exceeding the generally accepted quotas required for traveling).
TACIS. Germany plays a leading financial and organisational role in implementing various programmes of the EU Commission aimed at assisting the market reforms in Russia, and other countries of Central and Eastern Europe.
The main assistance programme is the Technical Assistance to CIS Countries – TACIS. The EU allots 500 million ECU annually for implementing projects within its framework. Germany's share of these expenditures accounts for 28%. Priority areas follows: nuclear safety, human resources (education, retraining of personnel), reconstruction of enterprises, infrastructure, power engineering, production, environmental protection, processing of agricultural produce, and social services.
In November 1996, the TACIS Committee approved a plan of action for 1996-99 including financing in the amount of 107.2 million ECU for Russia. One of the important programmes in TACIS is Raising Management Efficiency, which envisages three-month training for managers at companies in the EU member-states. In three years, approximately 500 specialists from Russia and other CIS countries took part in the programme. German companies are taking active part in this programme, including Siemens, ABB, Akrus, Bayer, Bertelsmann, BMW, Opel, Wirtgen, Techno-plast, Huls, Dal, DLR, Hoff Textile Design, and TUV Energy Consult, as well as Deutsche Bank and Baden-Wurttemberg Bank.
Germany is also carrying out its own consultation programme, Transform, for Russia and other countries of Central and Eastern Europe. The programme is aimed at raising the qualification level of managerial personnel, primarily of the Ministry of the Economy engaged in developing specific reform programmes. The German Foreign Ministry is financing this programme.
The Carl Duisberg Gesellschaft is taking active part in the programme. In particular, it organised a series of seminars in Russia, Ukraine and Belorussia on the role of the state in the transition to a market economy. Along with the Institute of Europe of the Russian Academy of Science, the Society published a book on this problem in 1996.
The KFW credit institution (Creditanstalt fur Wideraufbau), in association with the German Federal Ministry of the Economy, is carrying out a Consultation Programme for the Countries of Central and Eastern Europe, including Russia. Consultation services were rendered, in particular, in raising production efficiency, creating conditions for promoting the market economy, and developing banking, stock exchange and insurance business. The following regions were chosen to receive this assistance: Moscow and the Moscow Region, and the Leningrad, Vladimir and Tyumen regions. The KFW also coordinated the efforts of advisor to the Russian Government, German professor Kartte.
One of the lines of assistance to the Russian reforms are educational programmes and fieldwork for young Russian managers at German universities. This work is being coordinated by DAAT – the German service of academic exchanges. One of basic programmes is the Programme of the Russian Foundation of the German Economy. It costs 20 million DM and is intended for 10 years. More than 20 large German companies and banks are participating in its financing, including Ruhrgas, Mannesmann, Daimler-Benz, Deutsche Bank, etc. Up to 100 stipends will be granted every year to graduates and senior university students in economics, finance, law and social studies for a 10-month course at German universities.
This programme is being implemented on the initiative of the German ambassador to Russia Ernst-Jorg von Studnitz, after a visit to Moscow by German President Roman Herzog. It was approved by German Chancellor Helmut Kohl and Russian President Boris Yeltsin during their meeting in Moscow on 30 October 1997.