Go East!

BERLIN/MOSCOW/BEIJING | | russische-foederationchina

BERLIN/MOSCOW/BEIJING (Own report) - The German chancellor will be using her trip to Russia and China, which begins today, to enhance business relations beyond the realms of the EU and North America. This thrust is taking into account China's rapid rise and the subsequent shift of the focus of the global economy from countries of the Atlantic Basin to those of the Pacific Basin. Already now, with the USA, China and Japan, the world's three largest economies border on the Pacific Ocean. Having been saved from the effects of the world economic crisis through its exports to China, Berlin now sees itself forced to take measures to rapidly expand its German-Russian cooperation, because Russia is also being drawn into China's economic maelstrom. Business circles are already warning that, in its influence in Moscow. the West could lose out to Beijing. The newly established Berthold Beitz Center of the German Council on Foreign Relations (DGAP) will promote German business expansion in Russia. The agenda of Chancellor Merkel's current trip also includes concrete measures toward this objective.

Important Days

Chancellor Merkel, over the next few days, will visit Russia, China and Kazakhstan. The trip, which begins today, will be focused particularly on expanding business cooperation with Russia and China. These will be "important days for German business relations" announced Angela Merkel.[1] Moscow and Beijing are playing an important role in Berlin's long-term plans: Russia is by far Germany's most important energy supplier and China is expected to become the center of global economy. Last year, the People's Republic surpassed Germany, to become the world champion in exports. Experts suggest that China could replace Japan as the world's second leading economy before the end of 2010 and even surpass he USA during the coming ten to fifteen years. Germany has been profiting quite well from its booming business with China and exports to the People's Republic helped Germany to overcome the global economic crisis without more serious crashes.[2]

Junior League

But in the meantime, China's rapidly growing economy is also worrying Germany. Already at the beginning of the year, the director of the Hamburg Institute of International Economics (HWWI), Thomas Straubhaar, predicted that over the next decade, Europe will be pushed "from the center to the periphery" of global economic activity and inevitably be demoted into the "junior league".[3] Germany is seeking to prevent this demotion through the enhancement of German-Chinese business relations. China's rapid rise is clearly demonstrated by the Chinese BeiDou satellite navigation system. Hardly noticed in Europe, this system has already been further developed and could become operational earlier than the European Galileo System.[4] Global aviation provides another example of China's rise. Two years ago, the European market leaders, Lufthansa, Air France and British Airways were the world's most profitable airlines. Today, the two Chinese Airlines, Air China und Cathay Pacific, rank second, right behind Emirates (United Arab Emirates). According to experts, "in 2020, there will be as many passenger planes in China as there are throughout all of Europe" [5] - and this with ascending tendency.

A Question of Orientation

Berlin is not only trying not to be left behind in China's developments but also in Russia's. Over the past few years, Beijing has been intensifying business relations with Russia and has replaced Germany as Russia's main supplier. Chinese-Russian business relations are being enhanced - on an unequal basis: Whereas China is mainly importing energy resources from Russia, it is mainly exporting industrial products, because the modernization of the Russian industry is not really advancing, therefore lacking domestic Russian competition.[6] Beijing is more and more playing the role, Germany had been reserving for itself - it is receiving Russian raw materials and selling its products to Russia. Berlin's government advisors, such as Alexander Rahr, an expert on Russia, have for some time, been warning that Russia could begin to orient itself eastward and turn its back on Europe, if the European-Russian relations are not intensified (german-foreign-policy.com reported [7]).

Berthold Beitz Center

Certain circles in Berlin are renewing their efforts to speed up the enhancement of German-Russian relations. July 1, the "Russia/Eurasian Center" of the DGAP was upgraded and symbolically renamed. Founded in the mid-90s as an instrument of the new German eastward expansion, the center has, since 2008, been mainly financed by the German Committee on Eastern European Economic Relations and the Deutsche Bank. These two financiers are now paying 100,000 Euros each per year. The center is to intensify the strengthening of the bonds, above all to Russia and in this context, also to the Ukraine and the countries of Central Asia. "Through its profound analyses" it is supposed to particularly facilitate the strengthening of "German business engagements" with these countries.[8] It has now been renamed the "Berthold-Beitz-Center - Kompetenzzentrum für Russland, Ukraine, Belarus und Zentralasien in der DGAP" ("The Competence Center for Russia, the Ukraine, Belarus and Central Asia within the DGAP"). Since the 1950s, Berthold Beitz held a leading position in Krupp and then in ThyssenKrupp and is considered one of the mightiest men in German industry. He had been decisive for the expansion of business between the Federal Republic of Germany and the Soviet Union in the 1970s. Director of the Berthold Beitz Center is Alexander Rahr, one of the most prominent advocates of close cooperation with Russia in Berlin's establishment.

Concrete Steps

The agenda of Chancellor Merkel's current trip also includes concrete measures. Among the questions seeking answers is a decision on Moscow's coveted fusion of Russia's Sistema Corp. with Germany's Infineon AG. The project is being sharply criticized primarily in transatlantic oriented circles, because this could provide Russia access to security-relevant technology. So far, Berlin has been supportive of the fusion because it intensifies German-Russian cooperation. This project is being flanked by billions in business deals, for example to the benefit of the Siemens Corp. in Russia (german-foreign-policy.com reported [9]). Even the Deutsche Bahn AG maintains its interest in close cooperation, permitting the regular transport to China.[10] These undertakings promise high company profits and tighter bonds to Russia, bringing Berlin geostrategic advantages - a successful project for the maintenance and enhancement of German global power.

[1] Wirtschaftsbeziehungen intensivieren; www.bundesregierung.de 10.07.2010
[2] see also Future Conflicts
[3] see also Zweite Liga
[4] see also Europa bleibt zurück
[5] Flugmacht China; WirtschaftsWoche 12.07.2010
[6] Zwischen den Stühlen; WirtschaftsWoche 31.05.2010
[7] see als A Question of Orientation and Der Sinn der Aussöhnung
[8] Berthold-Beitz-Zentrum in Berlin gegründet; www.ost-ausschuss.de 30.06.2010
[9] see also The Berlin-Moscow Economic Axis (III)
[10] "Das sind keine Brosamen"; WirtschaftsWoche 28.06.2010