Westward ho for Russians

Russia showcases its intention to forge closer links with western companies at Hanover Fair.

Russia’s ambitions to be a major player in pan-European engineering and technology were underlined by its most prominent role yet at the Hanover Fair, Europe’s largest showcase for industrial innovations.

Russia, which this year for the first time joined the annual event’s A-list as an official ‘partner nation’, signed major deals with German engineering giants Siemens and BASF, and signalled its intention to forge closer links with western European companies for technology development projects.

Aerospace, automotive, healthcare and energy were all named by the Russians as priority areas for hi-tech co-operation.

The Russians’ pivotal role at Hanover was underlined by a joint appearance by president Vladimir Putin and German chancellor Gerhard Schroeder to formally open the gargantuan exhibition. The two leaders looked on as Siemens Transportation Systems and Russian Railways signed a deal worth up to N1.5bn (£1bn) to bring high-speed train technology to Russia.

Siemens will provide technology and infrastructure development services for the project, which will see up to 60 trains running mainly on the Moscow-St Petersburg-Helsinki route. The trains themselves will be built mainly in Russia in co-operation with local suppliers.

The second major contract to emerge from Hanover will see BASF given access to Russia’s huge gas reserves, the first time a western company has been allowed such a level of direct involvement. The company will form a joint venture with Gazprom, the local energy giant, to develop a transportation infrastructure that will bring Russian gas to the German market and possibly onwards to the UK and Scandinavia.

Putin claimed that the deal underlined Russia’s commitment to European energy stability and its desire to work more closely with western European partners on major projects.

Technology to generate and transport energy was heavily represented among the 150-plus Russian exhibitors at Hanover, with the aerospace, automotive and materials sectors also strongly in evidence. Russian officials said that partnership agreements to develop specific technologies were a priority.

However, even with the Hanover Fair still underway, news emerged of plans by the Russian authorities to impose a back-tax bill of up to $1bn (£0.5bn) on an oil joint venture partly owned by the UK’s BP.

The tax bill, a massive increase on the amount the Russians were previously seeking, was a stark reminder of why many western companies still regard the country as an uncertain place in which to do business.

There are also concerns that Putin’s long-term ambition is to re-nationalise many of the industries placed in private hands by his predecessors following the break- up of the Soviet Union.