Siemens Goes Nuclear with Russia

Forget our sense of the economic doldrums, the crashing and burning ruble, or even the relatively low level of trust in doing business with Russia following a military war, a gas war, and a war of words at Davos.  Things are looking peachy, at least for Germany’s largest industrial group Siemens, which has signed a series of blockbuster deals to build nuclear power plants in cooperation with the state atomic company, a sure sign of investment in Russia’s future economic growth.

After holding a meeting with Prime Minister Vladimir Putin (interesting how it always goes unremarked upon that it is Putin whom the business leaders meet with instead of Medvedev), Siemens CEO Peter Löscher announced that the company would a new transformer factory in the Voronezh region, work together on LNG, and form a joint group with Atomenergoprom to explore nuclear power plant construction projects in Russia. 

These deals are very notable in many respects, beyond just the fact that they are occurring in such a precarious time.

Siemens will indirectly be helping Russia increase its influence overthe energy sector (less natural gas for domestic consumption with everynuclear plant built – Putin has a plan for 26 of them in the next 12 years),and LNG exports, a notoriously underdeveloped area for Russia, whichwill help Gazprom compete in the global spot market and be free ofpolitically inconvenient pipelines. 

The transformers factories willalso be the first owned by the Germans since their last propertiesthere were “redistributed” by the Bolsheviks.  The electricity sector is a particularly interesting and sensitive area for Siemens to get involved with, and one that Anatoly Chubais has worked hard to privatize.  Some may remember his clashes with Igor Sechin, and there’s little doubt that Siemens will probably have to play some influence games in order to stay on top of things in such a shark tank.

Given the sensitive nature of many of these deals, the business arrangement is already deeply political:  “We are ready to move from the realisation of piecemealprojects to the creation of a full partnership between Siemensand our company Rosatom,” Putin said after the talks.  “We will help the realisation of your projects in any way wecan.”

Indeed they might, given Siemen’s less-than-proud history in Russia,which took second place in the global contest to see which country’sofficials were able to sap the most money from the German company’sbribery slush fund (which was legal under German up until a few years ago – not leaving Berlin with much a position to lecture on corruption).  Russia came in second to Nigeria as one of the top destinations for Siemens bribes.  Let’s see how it goes down this time.