Ships, chips and automobiles

Germany has lately been opening its doors to Kremlin-linked companies looking for technologies in automotive manufacturing, shipbuilding, and microchip production. This new openness could point to an economic, European dimension to the "reset" in Russian-American relations.
When US President Barack Obama came to power 10 months ago and promised to reorder relations between the West and Russia, the talk was of missile shields, NATO expansion, Iran and Afghanistan. No one thought that this reset could ripple out to include the ownership of Opel, the embattled German car plant. But this seems to be precisely the case, according to Arkady Dvorkovich, the economic adviser to President Dmitry Medvedev.
"It is a very good political signal," Dvorkovich said, referring to the deal that will see Russia's state-owned Sberbank and Canadian car components producer Magna take a majority stake in Opel, the European subsidiary of the bankrupt American car giant General Motors now owned by the US Treasury. "It means the US administration is ready for maximum economic cooperation with us," said Dvorkovich.
Sberbank, Russia's largest bank, and Magna, the world's largest car components producer, will each receive 27.5 percent of Opel. Sberbank will inject $0.5 million, and the German government - $1.7 million. Magna will oversee the restructuring of the company with an eye on the Russian market.
Coming the same week that Obama implemented a key reset policy by tearing up plans for an anti-missile shield stationed in Poland and the Czech Republic (which Russia opposed), the presidential nod for Russia's Opel bid raises the question of whether there is an economic - and European - dimension to the reset.
The German government under Chancellor Angela Merkel has been warming to Russia since Obama took office. At the recent International Automotive Fair in Frankfurt, Merkel talked down the risks associated with Russian investors, calling Russia a "market of the future, not something to be kept at an arm's length".
Merkel backed the Sberbank-Magna-Opel deal strongly and publicly, despite the fact that the real strategic investor in the Opel case is evidently the Kremlin, through proxies such as state-owned Sberbank or other state-linked companies. This both politicises the deal and makes it quite opaque, since it is unclear what economic entity will end up with the stake. "Our medium-term view is that Sberbank may well be a conduit for the transaction and a more logical Russian state or industrial entity will eventually be passed the stake," said banking analyst David Nangle.
Two other deals similar to the Opel rescue have been broached by the Russians, both involving opaque, Kremlin-linked structures bailing out struggling German companies which have technologies the Russians want.
On September 18, the media reported that Russia's largest telecommunications holding, AFK Sistema, was negotiating to purchase a share in the largest German microchip producer, Infineon, in what could be "an anticipated reciprocal ‘favour'," according to one telecoms analyst. Sistema owns Russia's largest chip producer, Sinterra.
And in a smaller but similar deal, the former Russian energy minister, Igor Yussufov, a current member of the Gazprom board of governors - and widely believed to be acting on behalf of Russian state-linked strategic investors - is set to acquire Germany's bankrupt Wadan shipyards, which has unique ice-breaking technologies needed by the Russians for their Arctic energy projects. Again, this deal has been welcomed by Merkel and the German government, despite the ambiguousness of who is actually buying the assets. Putin called upon Obama to follow up on the cancellation of the missile shield plans by supporting Russia's bid to join the WTO - the longest bid in the history of the organisation. Obama's position on Russia's WTO bid might also show whether the reset can develop an economic dimension. And an American reset on Russia's WTO bid will further have knock-on effects for Russian-European ties, since the signing of a new Russian-EU partnership agreement is largely dependent on Russia's achieving WTO membership.