Vladimir Putin takes control of the DMG Mori factory. A step that further intensifies the economic conflict with Germany.
Bielefeld - Since Russia began the war against Ukraine, Western nations have tried to put pressure on Vladimir Putin through economic sanctions. The expropriation of the Russian Rosneft group was already an issue. Russia, on the other hand, is looking for ways to inflict economic damage on the West and has expropriated the mechanical engineering company DMG Mori.
The factory in question, which has existed since 2015, was brought under control by Vladimir Putin. A year after Russia's invasion of Crimea, which violated international law, DMG Mori opened a factory in Ulyanovsk, Russia. There, the mechanical engineer planned the production of turning and milling machines - “Made in Russia for Russia”. According to the magazine Schweizer MaschinenMarkt, the investment volume was around 70 million euros. Less than nine years later, the Russian government took control of the plant.
DMG Mori assumes a permanent loss to Russia
Russian officials claim that the takeover of control is initially only temporary. DMG Mori, on the other hand, is pessimistic. “However, we assume that the Russian government’s decision is final and that a complete expropriation will follow,” company spokeswoman Katharina Contu told Wirtschaftswoche. The damage is estimated at over 90 million euros, which the German-Japanese mechanical engineering company is now demanding from the federal government.
Before the plant was even built, DMG Mori had received an investment guarantee from the federal government. Such contracts are granted by the federal government to protect German direct investments abroad against financial losses caused by political risks. According to the Federal Ministry for Economic Affairs, Germany had guaranteed around 28.5 billion euros in 2023 alone to protect such investments.
DMG Mori's business is unlikely to change as a result. As the company itself announced, it had already stopped all activities in Russia in spring 2022 - almost at the beginning of the Ukraine war. “At the moment the impression is given that we have broken our promise,” said a company spokesman in autumn 2023. “This accusation against DMG Mori is 100 percent false and we reject it with all our might.”
Putin is creating a new level of escalation in the economic war with expropriation
After February 24, 2022, the company no longer delivered machines or components to Russia. “In addition, we have completely cut off any external IT connection to Russia in order to make on-site operations impossible,” the company explained. However, it is “very likely” that machines that were manufactured before the Ukraine war were sold “without the knowledge or consent” of the responsible management. The company wanted to investigate how this could have happened.
The expropriation by Russia creates a new level of escalation in the economic conflict with Germany. There are also plans in Germany to expropriate Russian companies, such as the Russian company Rosneft. Just a few weeks ago, Russia reacted violently to a possible expropriation of Rosneft and spoke of a “devaluation” of Germany as a business location. Kremlin spokesman Peskov also considered retaliatory measures, such as confiscating German assets.
In contrast, Federal Economics Minister Robert Habeck (Greens) ultimately refrained from expropriation - for the time being. In addition, the European Union (EU) is currently looking for ways to seize billions of dollars in frozen Russian assets. How the West will react to Russia's expropriation of DMG Mori remains to be seen.