Austria Will Leave the Guard of Honor in the Urals

29.05.2009 — Analysis

In his interview to RusBusinessNews Martin Vukovich, Ambassador Extraordinary and Plenipotentiary of the Republic of Austria to Russia, explained why the Honourable Consulate of Austria in Ekaterinburg serves as a model; in which matters the Austrians left the Germans behind; and, what export from the Urals Federal District is of prime importance for Austria.

- Mr. Vukovich, you are a frequent visitor in Ekaterinburg. Why such an intensity?

- This is my fifth time in Ekaterinburg. The primary reason is the active work of the Honourable Consulate of the Republic of Austria that was opened here two and a half years ago. Today it is most instrumental for our presence in the Urals. The head of the Honourable Consulate in Ekaterinburg is Andrey Kozitsyn, Director General of the UGMK-Holding Managing Company; the work of the Consulate serves as a model for all other Austrian honourable consulates around the world. You can rarely see such activity, which makes us very happy.

Mr. Kozitsyn opened the Consulate in a superb building in the city centre. All consulate employees speak German and English. First events were cultural. Famous Austrian architects met with the students of the Academy of Architecture. These were followed by a lot of concerts and exhibitions; we opened the Austrian library - the fifth in Russia. All of that became possible with the financial support from Mr. Kozitsyn.

Ekaterinburg often hosts Austrian business delegations. Contacts between the Sverdlovsk Oblast and the Austrian federal lands of Styria and Carinthia have been actively developing as the Honourable Consulate carried out its activities.

- Do you have any plans to transform the Honourable Consulate into the Consulate General of the Republic of Austria? Your European Union neighbours - Germany, France, the Czech Republic, and Hungary - have sent their career staff to Ekaterinburg long time ago.

- Opening a staff consulate of the Republic of Austria is out of question, as we do not expand the network of our diplomatic missions. Government costs cutback is a general trend in the West. Our state agency undergoes downsizing as well; we even close embassies in a number of countries. The only embassy that we are opening is in Baku, as Austria has major interest in the power sector in Azerbaijan.

There are no staff consulates in Russia, and there will not be any. There is an Honourable Consulate General in Saint-Petersburg, and we have opened an Honourable Consulate in Nizhny Novgorod this February. The status of an honourable consulate can be raised to that of an honourable consulate general - the minimum term for such a promotion is five years. That is quite possible in Ekaterinburg.

- Based on the 2008 results, Austria ranks 24th in the list of international trade partners of the Sverdlovsk Oblast. However, product export to Austria amount to mere 15 millon U.S. dollars, and import to 75 millon U.S. dollars. Such low trade volumes cannot evidently satisfy the Urals, nor the Austrian business...

- I hear complaints about low trade volumes in many Russian regions that I visit. We do not even trade enough with Moscow, as Mayor Yury Luzhkov told me.

We do not keep separate statistics for trade volumes with the RF subjects. I can only give the total trade figure for Russia that reached its all-time high of 5.5 billion Euro at last year end, according to our assessment. This year the indicator might shrink by around a quarter due to the crisis.

But if we compare that to the trade volume between Russia and Germany, we are even ahead of the Germans in the trade volume per capita. Besides, the Austrian investment volume into the Russian economy has already exceeded 2 billion Euro. Our primary investments were into the wood-processing, construction supplies production, and financial services (banking sector).

Looking at the figures leaves me surprised - who else do we trade with if not with Russian regions? Solely with the Kremlin perhaps?

- In your opinion, what are the most promising trends in the expansion of economic cooperation between the Austrian companies and their counterparts in the Urals?

- The automotive industry, for example. Today, the German Opel is looking for a new buyer. The most likely option is its acquisition by the Canadian-Austrian Magna International and Oleg Deripaska's Russian Machines, with the financial support from the Sberbank of Russia.
Should the deal take place, Magna International will expand its automotive supplies production in Russia.

Our long-time contact in the Sverdlovsk Oblast, and a counterpart in the ferrous metals industry - OAO Nizhniy Tagil Iron and Steel Works - purchases equipment in Austria.

The main resource we buy here is the Yamal gas. In 1968, Austria was the first West European country to import the Russian gas produced in the Yamalo-Nenets Autonomous Okrug. More than 40 years later, this export still serves as the core of the economic relationships between Austria and the Russian Federation.

- Austrian Airlines introduced regular flights between Vienna and Ekaterinburg in 2005. What is the outlook for this flight?

- It is hard to foresee the situation. Austrian Airlines is no longer an independent air carrier. Early in 2009 it has been acquired by Lufthansa that will develop its operations strategy from now on. The agreement is only to formally become effective in June this year, following the approval of the European Commission in Brussels.

We can only hope that Lufthansa will keep Austrian Airlines as a brand, and Vienna airport as an air hub for flights all over the world. It is important that Vienna saves its hub value, and air traffic is not to be transferred to Frankfurt, the home base of Lufthansa. However, it depends on the new owner to decide whether all flights will be maintaned. If the Vienna-Ekaterinburg flight is very popular and profit-making, I do not see any reason for its cancellation.

- What economic topics have you raised in the talks with Plenipotentiary Envoy of the President of Russia to the Urals Federal District and with the regional authorities during this visit?

- The discussions with Nikolay Vinnichenko, the Russian President's Envoy, was related to the possibility of organizing the second presentation of the Urals Federal District economic potential in Austria (the first one took place in 2002), involving our chamber of commerce. We also discussed the idea of having sessions of the Intergovernmental Commission for Economic Cooperation between Austria and Russia, and the Russian-Austrian Business Council (consists of directors general of the companies operating in both countries) in Ekaterinburg this autumn. Such sessions take place once a year in Austria and Russia in turn, and we have experience of conducting them in the regions. In my view, Ekaterinburg might be quite suitable for such a purpose.

The interview has been prepared by Pavel Kober