By Alexander Jung, Matthias Schepp and Benjamin Triebe
His fellow Russian Rustam Aksenenko, a major shareholder in the Escada fashion house, is anything but a silent partner. He owns close to 27 percent of the business and is a member of its supervisory board. Aksenenko played a key role in the ouster of the company's former chairman, Frank Rheinboldt, and the appointment of his successor. Now he is dueling with private equity firm Apax Partners, another potential major investor, over the Munich-based luxury fashion group's future direction.
In the cases of both Escada and TUI, the buyers have pursued the classic predatory pattern: They acquire shares in well-known, but slightly damaged corporations, restructure them and hope that their efforts will pay off. In other words, they want to see returns on their investments. But the Baltic Sea shipyards are a different story altogether.
In this case, the investors are primarily interested in acquiring know-how. Russian investor FLC West plans to have the Warnemünde and Wismar shipyards build special vessels to be used in oil and gas production in the Arctic. A visit to the shipyard grounds reveals why the Russians are so enthusiastic.
A white ship tower and bridge is already in place there, ready to be mounted onto a freighter with icebreaking capabilities. This tower is unusual because it provides an equally commanding view of both the bow and stern of a ship. If the ship gets stuck in an ice floe, the captain can drive it into reverse, rotate the vessel and break through the wall of ice with the ship's reinforced stern. This is a special ship, designed to operate in the Arctic Ocean, which Aker has developed for Russian metal producing giant Norilsk Nickel.
The Political Dimension
Russian shipyards lack the expertise to develop these complex marvels of nautical engineering. "Russia has no competent shipbuilding industry," says Einar Brønlund, President of Aker Yards Germany, adding that the differences in levels of knowledge are substantial. High-tech Germany is becoming a quasi-extended workbench for wealthy Russia.
This also lends a political dimension to the shipyard deal. Behind the three letters FLC, an acronym for "Financial Leasing Company," stands the Russian state. The company -- 43.7 percent state-owned and 40.6 percent owned by the government holding company OAK (United Aircraft Corporation) -- was established two years ago by President Vladimir Putin. He had hoped that it would provide Russia with an entry into the world league dominated by Airbus and Boeing, but in this respect it has been so far unsuccessful.
OAK paid insufficient attention to the mass production of aircraft, says banker and aviation executive Alexander Lebedev. "And now they're even buying shipyards," he says incredulously. In describing the German shipyard deal, RBK Daily, a business newspaper, writes derisively: "Ships Are Learning to Fly."
But Moscow is unimpressed by such criticism. The opportunity to get into the shipbuilding business was apparently so attractive that OAK's owners promptly expanded its field of business. Meanwhile, the financial investment firm FLC functions as a purse for the state, providing the necessary capital for foreign acquisitions in strategically important sectors.
Putin decided some time ago that his country's future lay in "going West." "We are not arriving with Kalashnikovs," he said during a visit to Germany two years ago, "but with money." His successor Dmitry Medvedev, who takes office in May, has already announced that he plans to continue the same course.
For Medvedev, it is the "government's obligation" to support Russian companies "in the global competition, especially in the fields of high technology and energy." KM, a popular Internet portal, summarized the president-elect's strategy: "Medvedev is calling upon Russians to buy the West."
Many find such ambitions disturbing. The Germans, too, feel a vague sense of unease toward the new financiers from the East, a feeling fueled by the dubious ways many oligarchs made their money in the 1990s. Russia is still considered one of the most corrupt countries in the world, ranking 143rd out of 179 nations in Transparency International's 2007 Corruption Perceptions Index. There is considerable fear that Moscow could misuse its foreign holdings to further its political interests.
The Kremlin has demonstrated often enough that it is not squeamish. For example, the state-controlled energy giant Gazprom cut off gas supplies to Ukraine and Belarus, causing widespread problems throughout much of Central Europe. And the Russian intelligence agency came up with fabricated reasons to conduct a recent raid of the headquarters of the oil company BP-TNK, forcing 148 employees to leave the country because of alleged visa problems.
When it comes to the key energy sector, Moscow shows no mercy and is guided by national interests. On the other hand, this is precisely the area in which the German government is becoming less open to the world.
With its current amendment to the German Foreign Trade Act, Berlin hopes to make it more difficult for foreign investors to gain access to strategically sensitive industries. The main purpose of the new legislation is to protect energy utilities like E.ON or RWE from foreign influence. The problem is, what defines a sensitive industry? Could the shipbuilding industry have strategic importance? And are only government funds suspicious, or should private investors also be included?
The Russian investments in Germany raise a host a sensitive issues, and the Warnemünde deal will certainly not be the last trans-Eurasian acquisition. The financial crisis is depressing the value of Western corporations, some of which have become bargains. High commodities prices, in turn, provide Russian companies with a guaranteed cash flow to pay for such investments.
Swedish economist Anders Aslund, one of the masterminds of the 1990s economic reforms in Russia, is convinced that the wave of acquisitions has only just begun. "The Russian government and Russian entrepreneurs," he predicts, "will buy up Western companies on a grand scale."
Translated from the German by Christopher Sultan
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