German Help for Russia

At the end of a two-day visit, Putin on Wednesday traveled to Bavaria to meet with politicians and business leaders. Bavaria, Germany's most prosperous state, has about 1,000 firms doing business with Russia, could become a 'locomotive' in helping his country, the president said.

Bavarian Premier Edmund Stoiber said Germany was willing to cooperate with Russia in the economic and scientific fields, except where strategic industries were involved.

German firms plan to invest more than 1.4 billion euros in Russia next year, said Klaus Mangold, chairman of the powerful Eastern Committee of the Federation of German Industries.

"Russia only has the world's biggest reserves of natural resources, it is also one of the world's fast-growing economies and is close to Germany geographically," he said. "I am confident that German firms will increase their commitment in the years ahead. There are many projects planned in the energy and automobile sectors."

Coming to Germany

While Volkswagen, Commerzbank and Deutsche Post have made splashy announcements about the billions they are investing in Russia, Russian investors have quietly begun buying their way into the German market.

The biggest deals have come in the energy sector. The Russian giant Gazprom has partnered with German BASF in the Wingas group, which supplies numerous German public utilities and large industrial companies with natural gas. Russians also have a block of shares in the VNG Group, a large gas wholesaler.

But Russians are eager to invest even more. After meeting with Putin in Dresden on Tuesday, German Chancellor Angela Merkel said she has no doubt they will do so. It's hypocritical to speak of free trade without accepting this reality, Merkel said.

"I can easily understand how the Russian businesses see this as a win-win situation and I think more contracts will happen in the future," she said. "I understand the need of Russia and Russian companies to get a foothold here in Europe."

Keeping a low profile -- so far

But up to now, most Russian investors have remained low key, buying into the fashion industry, cosmetic companies, biotechnology firms and tourism. Russian multi-millionaire Rustam Aksenenko, who owns a stake in the fashion house Escada, said he thinks many Russian investors are waiting for a chance to become more visibly involved with German corporations.

"From an economic point of view, we can naturally only hope that these relations, which are already on a high level, will continue to develop in the future," added Oliver Wieck of the East European Committee of German Industry.

Creating stability in Russia requires not only political stability but also economic growth, Wieck said, adding that Russia is profiting from its natural resources and trying to diversify its economy and to become more modern.

However, Russian investors still have to learn the rules of the game for doing business in Germany. Russian entrepreneurs frequently don't inform German partners about their business activities. The differences in mentality can create misunderstandings for Russians investing in Germany and vice versa.