UPDATE 1-German execs criticise West for allowing tension with Russia to rise

Sat Mar 29, 2014 12:10pm EDT

* ThyssenKrupp CEO says Russia's back is against the wall

* Adidas CEO says West waited too long to start talks

* Deutsche Post CEO sees no alternatives to Russian gas

* Development agency says companies drop investment plans (Adds comments by economic development agency, German Committee on Eastern European Economic Relations)

By Maria Sheahan

FRANKFURT, March 29 (Reuters) - Several top German executives criticised the strategy of the U.S. and Europe in dealing with Russia after it took control of the Crimea region, fearing the consequences for their businesses.

The European Union, United States and other Western nations have imposed sanctions on Russia in response to its seizure of the Crimea region of Ukraine and have threatened broader economic penalties if the crisis escalates, triggering the worst East-West clash since the Cold War.

Steelmaker ThyssenKrupp's Chief Executive Heinrich Hiesinger told daily newspaper Die Welt that the events of the past had shown that great change could be achieved if the West cooperated with Russia rather than being confrontational.

"Now we have a situation in which Russia feels that its back is against the wall," he said in an article published on the paper's website on Saturday.

Russia is Germany's 11th biggest commercial partner, with trade reaching 76.5 billion euros ($105 billion) last year, according to the trade association Ost Ausschuss.

Many companies are worried about losing out on business if further sanctions take effect. Some 300,000 German jobs are linked to business there and Europe's biggest economy depends on Russia for 35 percent of its gas.

"Many German companies that invested in Russia last year or wanted to build production sites there have now given up their plans or put them on ice," Bernd Hones, Economic Correspondent at economic development agency Germany Trade & Invest in Moscow, told weekly paper Frankfurter Allgemeine Sonntagszeitung.

He added that German corporations had the impression that Russian industrial firms did not think it politically appropriate to do business with German companies.

MEETING PUTIN

Some German executives are taking steps to ensure their business is not put at risk.

The head of Germany's state railway said this week he planned to travel to Moscow. Joe Kaeser, chief executive of engineering giant Siemens, drew criticism from some German politicians for meeting Russian President Vladimir Putin on Wednesday.

Some non-industrial German companies, such as retailer Metro and drugmaker Stada have said they would continue to invest in Russia as long as threatened G7 sanctions do not disrupt business.

Herbert Hainer, chief executive of sporting goods maker Adidas, told Die Welt that he believed the West waited too long to start talks with Putin when tensions between Russia and Ukraine rose.

"We should ask ourselves if someone like Putin shouldn't have been part of the process much earlier, instead of holding off with talks until it's too late," he said.

Adidas has a high exposure to the Russian market, where it operates over 1,000 stores. Its share price has taken a hit, falling 15 percent since the start of the year, at least partly on concern over the Crimea crisis.

Eckhard Cordes, head of Germany's Committee on Eastern European Economic Relations, warned that some trade with Russia could shift to China if Europe turned its back on Russian gas.

"Russia would find new sales markets in China if Europe limited its energy imports," he told Frankfurter Allgemeine Sonntagszeitung, adding such a development could not be in Europe's interest.

Logistics group Deutsche Post DHL's Chief Executive Frank Appel told Die Welt he believed there were few viable alternatives to Europe's dependence on Russian gas, echoing comments Germany's Economy Minister Sigmar Gabriel made on Friday.

"Since we don't have major sources of raw materials in Europe, we will always be dependent on others," Appel said.

"And it seems questionable to me whether dependence on the Middle East or Venezuela would be better than that on Russia."

($1 = 0.7271 Euros) (Reporting by Maria Sheahan; Editing by Sophie Hares and Elaine Hardcastle)

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