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Siemens gas turbines taken to Crimea

Under pressure from the German government to extirpate the company from any harmful events, Siemens has reacted swiftly to eradicate the possibility of further problems emerging. All operations in Russia are now under review and links with the offending company which is accused of illegally moving the gas turbines to Crimea have been irrevocably damaged. For an influential and large company such as Siemens to take such stern action will likely mark a major change in relations international business has with Russia. Suddenly trust has been eroded and further sanctions provided with fresh impetus.

The crisis has provided a very challenging diplomatic situation for Russia. History suggests extracting a full and frank account will be near impossible, especially so given the close links the case has to the political and business establishment. That Siemens intends to sue could make the situation very difficult for Russia. Moscow will not want foreign direct investment to be deterred, hence why resignations have now taken place amid accusations of passing on state secrets. Sentiment among major international companies operating in Russia could become much more cautious, expanding the impact of sanctions.

Quite why parties in Russia were willing to take such risks is bemusing – Siemens was never likely to fail to notice gas turbines had not arrived at the intended location. Furthermore, simply getting the turbines operational without the assistance of Siemens will be a very troublesome undertaking; industry experts believe attempts to do so will fail. Even if the gas turbines are made to work, the replacement of the blades presents further problems. That high risks were taken has been taken by some to signal the impact sanctions are having on the economy, and they probably have a point.