Spain and Russia, a limited commercial relationship, key for tourism and with some investor oligarch

Spain and Russia, a limited commercial relationship, key for tourism and with some investor oligarch

The Russian attack on Ukrainein addition to the military and political focus, has consequences in the economic and energy field, although, for the time being, it is unforeseeable how it will affect world trade, which is still unbalanced by the bottlenecks in shipping after the crisis caused by the coronavirus.

The war also reaches football: Schalke removes Gazprom from his shirt and puts pressure on UEFA

The war also reaches football: Schalke removes Gazprom from his shirt and puts pressure on UEFA

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waiting to see how the conflict impacts, above all, on raw materials such as gas or oil, Spain is not among the first importing and exporting countries of Russia and Ukraine. However, the arrival of Russian tourists is essential for the tourism sector and, if that issuing market is affected, it could weigh down the long-awaited recovery of the sector.

The large figures indicate that Spain is neither among the largest supplier countries, nor customers of Russia, according to data published by the Ministry of Foreign Affairs. Nor are we among the countries where the State presided over by Vladimir Putin invests the most. That podium is occupied by Cyprus (10,859 million dollars); United Kingdom (3,815 million) and the Netherlands Antilles (3,126), according to pre-covid data, from 2018, the latest published by the Ministry.

The 'pure' commercial data, those of exports and imports, are updated at the end of 2021. In this last year, Spain has made exports to Russia worth 2,213 million euros. A figure that is similar to that maintained, for example, with Denmark or Canada, according to statistics published by the Ministry of Industry, Trade and Tourism.

In contrast, the value of imports to Spain – where oil and gas weigh – is three times higher. In 2021, imports from Russia stood at 6,033.6 million euros. It is practically 1.8% of everything that Spain imported in the last year and figures similar to those maintained with countries such as Poland or Nigeria.

If you look only at Ukraine, the figures are lower. In total, in 2021, Spain exported more than 681 million euros to the country now invaded and nearly 2,400 million were imported. Above all, cereals, such as sunflower, corn and wheat. According to the Asaja agrarian association, Spain imports 30% of the corn it needs from the Ukraine.

What do we export to Russia and Ukraine?

Data published by the Institute of Foreign Trade (ICEX) indicate that Spain's exports to the two countries in conflict are not very different. The latest figures broken down by product are from 2020 and show that more than 17% of Spanish exports to Ukraine were automobiles and tractors, 8% machinery of all kinds and then, already weighing less than 5%, from ceramic products. to preserves or clothing.

And, to Russia, more than 17% of exports are machinery, a similar figure is textiles and another 10%, automobiles.

Precisely, the Spanish Association of Automobile and Truck Manufacturers (Anfac) published this Thursday the export data for 2021 and the Russian market is not among the 10 largest, nor is Ukraine.

In figures, Anfac tells that, during 2021, a total of 3,098 units were exported to Russia, 0.2% of total vehicle exports.

Which companies are affected by the conflict?

The beginning of the attack on Ukraine also leads us to look at which companies have opted for these two countries, which in recent years have been considered two expanding economies. ICEX reports that thirty companies are registered with the Economic and Commercial Office in Ukraine, far from the 130 with a presence in Russia, a registration that is voluntary.

At the moment, companies speak of a lack of certainty and greater pressure on costs and inflation, above all. "The uncertainty will cause increases in the prices of energy and other raw materials of which Russia and Ukraine are important producers, such as cereals, for example. This will also feed inflation," says the Exporters Club, a 'lobby' multisectoral, including Repsol, Iberdrola, Renfe or Talgo, among other groups.

Among these companies in both markets there is a mix of listed companies and large family companies, such as manufacturers for the automobile industry Antolín, Gestamp or Cie Automotive, with a presence in Russia. Just like Acerinox, Técnicas Reunidas, the Fluidra swimming pool company, the Meliá tourist company or the Fuertes or Viscofan food groups; in addition to Inditex or Tendam textiles. Meanwhile, in the Ukraine there are Mayoral, Tous, Lladró or the industrial company Teka.

The case of Inditex is relevant for being the largest textile distribution company in the world and the largest Spanish company by value on the stock market, more than 73,000 million euros; is present in both markets. The company founded by Amancio Ortega has almost 80 stores in Ukraine, including 16 Bershka stores, as many Stradivarius stores and a dozen 'Zaras' stores. Locals that this Thursday have closed. Meanwhile, in Russia it exceeds 500 establishments, of which more than 100 are Bershka, more than 70 are Zara stores and as many are Massimo Dutti.

At the moment, the Galician company assures that it is following the events "very closely". "The safety of the members of our staff and their families is our priority and we are going to make the decisions that are appropriate to the events," he says. A business exhibition, although Inditex does not give specific figures on results by country, which on Thursday resulted in a 3.8% drop in the stock market.

Red numbers that have also hit Técnicas Reunidas (-2.5%), Cie Automotive (-5.2%), IAG, Iberia's parent company (-6.1%); Meliá (-3.9%) or Amadeus (-2.2%). In the case of Técnicas Reunidas, it announced just six months ago a contract to collaborate with the Russian group Gazprom Neft in the development of a waste treatment plant at a refinery in Moscow, valued at 240 million dollars.

This business presence and the volume of imports and exports with Russia, where the conflict will have a "very limited or zero" impact, according to the Secretary of State for Trade. On the other hand the President of the Government, Pedro Sánchez, in his institutional declaration he did acknowledge that a war like this "undoubtedly" will have an impact on the economy, but "whatever measures are necessary to mitigate the economic and energy impact" will be taken, given the rise in gas prices that it has already caused.

Doubts in tourism

Apart from this business and commercial front, for Spain the blow may come from the hand of tourists. Russia is a key market. In the pre-covid scenario, it was the tenth country that contributed the most tourists to Spain. In 2019, more than 1.3 million visitors from that country arrived.

Instead, in 2021 that figure plummeted below 120,000 tourists. For this reason, for this year the sector saw a relevant margin for improvement, once the limitations on international mobility were lifted. In this case, above all, for coastal destinations, the Balearic Islands and the Canary Islands.

Another business lobby that has already assessed the consequences of the first stages of the armed conflict is Exceltur. Its vice president, José Luis Zoreda, assumes that the war can hit intra-European tourist demand and that, for example, in Catalonia, 50% of overnight stays by foreigners in 2019 were Russian tourists.

And some great investor

The big Russian investors, for the moment, have not had Spain among their priorities. It must be taken into account that the National Securities Market Commission (CNMV) does not break down all the shares in listed companies that do not exceed 3% of the capital and there may be more large Russian investors than are known.

Data from the Ministry of Foreign Affairs show that, according to 2018 data, Russia ranked 41st among the largest investors in Spain, with just over 470 million euros. Investments focused on real estate and construction (more than 45% of the total), hotels and tourist accommodation (35%) and the metallurgical industry (close to 4%).

There is a proper name that stands out above the rest, the Russian tycoon Mikhail Fridman who, in 2019, took control of the Dia supermarket groupafter a business battle that came to the National Court. Currently, through its investment arm Letterone, Fridman controls more than 77% of the distribution chain.

Other Russian investments have not turned out as expected, such as another supermarket group, Mere, which arrived in Spain less than a year ago and has decided to put the brakes on its investment and withdraw.

There are other mega-investors indirectly linked to the two countries in conflict, such as Len Blavatnik, with a British passport but born in Odessa (Ukraine). Blavatnik owns Dazn, which has taken over the LaLiga broadcasting rights for the next five years. Precisely, football is one of the collateral effects of the Russian attack. The UEFA considers changing the venue for the Champions League final, which would have to be held in St. Petersburg. A stadium that is sponsored by Gazprom, whose logo on the shirt has already been removed by the German Schalke 04.

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