Interdependence Russia can continue to rely on Austria

Today's standards for russophilia are different from those from last year. Austria supports the sanctions imposed on Russia as a result of its invasion of Ukraine.

However, it seems like many actors are having a lot of trouble as a result of this. This is also supported by Emil Brix, the director of the Diplomatic Academy in Vienna, who stated in an interview with the FAZ that "Austrian representatives, both in politics and business, are fostering an atmosphere that is pro-Russian.

The Western Alliance suffers as a result. Brix thinks that the government's actions against oligarchs and Russian assets are legal and in accordance with EU standards.

But the seasoned diplomat, who was also ambassador to Moscow, views it critically when Austria positions itself with proposals, such as mending relationships out of economic considerations. Two thirds of the previously active Austrian companies are still active in Russia, according to studies by the Kyiv School of Economics (KSE), almost a year after the beginning of the Russian invasion of Ukraine.

Only three of the fifty-two companies mentioned have abandoned the Russian market since February 24; nine have made exit announcements; and forty-two intend to stay. This indicates that compared to businesses from other nations, Austrian investors are significantly more devoted to Russia.

Little desire to pull back A study on voluntary "self-sanctions" by Western businesspeople serves as the background for the Ukrainian research. Experts consider this study to be important for understanding Russia's future economic prospects. A database created by the University of Kyiv based on open sources contained information on approximately 3,000 foreign businesses with operations in Russia.

38 percent of them desire to leave the country, and 5% of them have already done so in recent months. According to Ukrainian experts, 39 percent of all surveyed foreign corporations are currently interested in staying in the conflict-ridden nation.

In terms of Austrian investors, this percentage is 65.6%. Another example of how Austrian businesses will continue to operate in Russia is a previously scheduled event there that was only postponed following public outcry.

The last week of January saw a cross-country event in the Moscow region, organized by the foreign trade center of the Austrian Federal Economic Chamber (WK), which is housed at the Austrian embassy in Moscow. The event was open to "Austrian companies with their own presence or business interests and their local partner companies.". The event was canceled after the liberal MP Helmut Brandstätter posted on Twitter that it was a "shame for Austria.".

A spokeswoman for the Chamber of Commerce said on Wednesday afternoon that the event in question should not have been combined with a sporting event because it was intended to facilitate information exchange for businesses that were already present. She emphasized, "We apologize for the format selected, which will not be used.

The WK, the spokeswoman continued, "condemn the Russian aggression war against Ukraine.". The second-largest foreign investor group in Austria is Russia, behind Germany.

They are primarily involved in the banking industry, the real estate industry, and the energy industry. On the other hand, a lot of Russians conduct business in Austria.

The Russian and Ukrainian economies and the Austrian economy are strongly interdependent. The relationship between Vienna and Moscow is stronger than between Vienna and Kyiv, though, due to the size of the Russian market alone.

Austria and Russia's bilateral trade increased by twofold to 5.35 billion euros in the first half of 2022, setting a new record-high. The significant rise in imports was a major factor in this expansion. Despite the enormous issues with sanctions and transportation, Austrian exports are even marginally around 0 in the first half of 2022, increasing by 6 percent to 975 million.

Additionally, this is due to the fact that the export is primarily made up of industrial goods that were ordered prior to the Ukraine War and had to be delivered before the previous contract exceptions expired in the summer of 2022 due to the sanctions they were subject to. Lots of profit from doing business in Russia The database of the Kyiv School of Economics does not identify the specific factors that influenced a company's decision to carry on doing business in Russia in spite of significant political risks.

Russian businesses in the energy and finance industries with owners linked to "unfriendly states" have only been permitted to change their ownership structure with the approval of President Vladimir Putin since the beginning of August. Particularly impacted is the Russian Raiffeisenbank, which has more than 9,000 employees and is the Austrian company with the largest workforce in Russia, according to the KSE database.

Half of its consolidated profit was generated in Russia by its parent company, Raiffeisen Bank International (RBI), the second-largest financial institution in Austria, in the first three quarters of 2022. However, RBI was also busy considering "strategic options" for the Russian branch's future. Despite Austria's reputation as an "unfriendly state," businesses in the tiny nation are occasionally treated very well: the largest bread combine in Sochi, southern Russia, ordered goods from Backaldrin International The Kornspitz Company on a larger scale in 2022, whose top manager Wolfgang Mayer is the Honorary Consul of the Russian Federation in Upper Austria . Recently, almost the entire RBI board, including CEO Johann Strobl, was put on a list of individuals recommended for employment.

The RBI is also accused of approving loan deferrals for Russian soldiers in addition to the sanctions recommendations. RBI responds by asserting that it must comply with the law.

Following Russia's invasion of Ukraine, some well-known figures in politics and business found it difficult to draw a clear boundary. The resignations of the businessman Siegfried Wolf, the former foreign minister Karin Kneissl, and the former conservative chancellor Wolfgang Bowl from the supervisory boards of Lukoil, Rosneft, and Sberbank Europe came only as a result of pressure.

Hub for spies And Vienna continues to appear to be a paradise for Russian spies. It goes without saying that "The Third Man," a classic screenplay by Graham Greene, also contributes to this.

The Danube city is regarded as an "aircraft carrier" for covert Russian operations in Europe, according to publications like the "Financial Times". Few western capitals have been penetrated as thoroughly by Russian secret service agents as Vienna, according to diplomatic circles.

This claims that Austria is the base of operations for every fourth Russian spy operating in Europe. They assert that Vienna has actually grown in significance following the coerced expulsion of more than 400 Russian diplomats from the EU.

Austria did not even send back a few diplomats because they did not want to upset Russia because of the ongoing economic ties. The connections between Jan Marsalek, a member of the Wirecard board of directors who reportedly fled to Russia, and the Vienna Federal Office for the Protection of the Constitution and Combating Terrorism (BVT), may only serve as a footnote in the unique relationship between Vienna and Moscow.

Additionally, there were more sophisticated economic channels to fortify ties with Austria. In the years before the invasion of Ukraine, Austria's reliance on Russian energy imports through Gazprom and the nation's largest oil and gas company, OMV, had grown.

Following the Second World War, OMV was the first Western company to sign a gas supply agreement with Russia. The Gazprom contract was extended to 2040 in 2018, when Russian President Vladimir Putin last visited Vienna.

After experiencing significant fluctuations over the past few months via the Ukraine route, the gas supply is now operating at a normal level, according to OMV, the provider that holds almost half of the market in Austria. Austria's dependence on Russia, which was four fifths a year ago, has since been cut in half.

According to the Ministry of Climate, only about 40% of the natural gas currently produced comes from Russia. Russian interest in the nation at the center of Europe awoke at the latest following the fall of communism in Eastern Europe. Russia is a hub between West and East Europe.

Vienna was the perfect location for international business activities between the West and the East because of its geographic location. The strict banking secrecy that Austria had at the time was another plus for the country.

Additionally, foundation law turned out to be appealing. Real estate commitments were made in the wake of branches, and transactions that would have otherwise been too complex for non-EU citizens to complete could also be done so via foundations with Liechtenstein- or swiss-based companies acting as the legal owners.

Probably still in existence today are such structures. Among other things, the President of Russia was welcomed in Austria in 2014 and paid a visit to the Chamber of Commerce's headquarters.

Putin's first trip to an EU nation came after the bloody annexation of Crimea that same year, and he went to Austria. Standing ovations when the president of Russia entered the ballroom at the Chamber of Commerce are something that will always stick in my memory.

They've known each other for a very long time, as evidenced by the applause and laughter when Christoph Leitl, the president of the Entrepreneurs' Association, joked about his own lengthy presidency. The state visitor from Moscow sitting next to Federal President Heinz Fischer, who appeared amused, then interjected: "A dictator, but a good one. "According to historical tradition, Austria and Russia have had a close relationship ever since the country was granted neutral status following its participation in National Socialism in the post-war order.

After the Second World War, the Soviet Union had influence over Austrian politics and appointed Karl Renner as the country's first Federal Chancellor. The Western Allies looked at him suspiciously because of this.

Political neutrality has become out of date, according to Brix, who adds, "Don't think that neutrality can be considered protection - neither against cyber attacks nor against missiles or a territorial attack.". Neutrality may be questioned by someone who observes some almost anticipatory obedience, possibly because the state treaty's original copy is in Moscow.

Only in 1995, four years after the Soviet Union's dissolution, was Austria able to become a member of the EU. As a result of the State Treaty and the prohibition against joining Germany, this had previously always prevented accession.

There will, however, be a day following the conflict in Ukraine, Putin or not. A seasoned diplomat like Brix is aware that whenever security and disarmament are at stake, talking to the aggressor is necessary and that the West should maintain its economic isolation.

In 1995, four years after the Soviet Union's dissolution, Austria finally became a member of the EU. As a result of the State Treaty and the prohibition against joining Germany, this had previously always prevented accession.

There will, however, be a day following the conflict in Ukraine, Putin or not. A seasoned diplomat like Brix is aware that whenever security and disarmament are at stake, talking to the aggressor is necessary and that the West should maintain its economic isolation.

In 1995, four years after the Soviet Union's dissolution, Austria finally became a member of the EU. As a result of the State Treaty and the prohibition against joining Germany, this had previously always prevented accession.

There will, however, be a day following the conflict in Ukraine, Putin or not. A seasoned diplomat like Brix is aware that whenever security and disarmament are at stake, talking to the aggressor is necessary and that the West should maintain its economic isolation.

".

Additionally, this is due to the fact that the export is primarily made up of industrial goods that were ordered prior to the Ukraine War and had to be delivered before the previous contract exceptions expired in the summer of 2022 due to the sanctions they were subject to.