Trade and economic relations between Russia and Denmark are governed by a 1992 intergovernmental agreement designed to strengthen economic, industrial, scientific and technological cooperation, a 1993 agreement to cultivate and provide mutual protection for investment, a 1996 agreement outlawing double taxation, a 1997 agreement for technological cooperation, and a raft of other agreements between individual government ministries.
Russian-Danish trade has grown significantly in recent years. In 2008, Russian exports to Denmark reached $1.85 billion and imports reached $1.82 billion, for a total value of $3.67 billion.
Russian exports to Denmark were dominated by hydrocarbons, petroleum and petroleum products (55.5%), ferrous metals (37.9%) and timber/lumber (2.1%). Machinery and equipment accounted for 1.0% of Russian exports.
Russian imports from Denmark were dominated by equipment and mechanical devices (21.4%), pharmaceutical products (15.1%), meat and meat products (14.7%), fish products and other seafood (6.2%), tools and optical devices (5.7%), electrical equipment (4.0%) and chemical products (2.4%).
Bilateral trade from January to August of 2009 fell to approximately $2 billion (down 19.8% compared to the same period for 2008). Russian exports to Denmark accounted for upwards of $1.2 billion of this number, while imports accounted for $772.6 million.
Investment between the two countries is growing, but potential for this growth is far from realised.
The following well-known Danish companies have continued to invest in Russia: Danfoss (which specialises in thermostats), Velux (building materials), Rockwool (insulation materials) and Broen (ball valves). In addition, the Danish company A.P. Moller - Maersk Group has also launched extensive operations in Russia, and two Danish companies have decided to establish their own production facilities to serve the Russian market - Hatting, which is building a bakery in the Moscow suburbs, and Derby-Caravell, which is building an findustrial refrigeration units plant in Kaliningrad. There are also plans to involve Danish companies in efforts to modernise cattle farming in several regions in Northwest Russia and the Krasnodar Territory. In total, around 200 Danish companies operate in Russia.
Grundfos, one of world's leading manufacturers of pumps and pump solutions, first entered the Russian market in 1998 and opened its first plant in Russia on May 26, 2005 in the Istrinsky district of the Moscow Region. The project attracted $12 million in investment, and the company plans to build two more plants in Russia. Projects such as the Bolshoi Theatre, the Cathedral of Christ the Saviour and the Baltika and Zolotaya Bochka breweries were all built with Grundfos pumps. The Danish pig farming company AGRIPO-Taldom also opened a facility on September 15, 2007 in the Taldomsky district of the Moscow Region.
The Danish Carlsberg Group is heavily invested in Russia. Carlsberg Group subsidiary Baltika Beverages Holding Company has built a network of 11 production facilities in major cities in European Russia, including the St Petersburg-based Baltika Brewery, one of the largest breweries in Europe. Consequently, Baltika Beverages Holding Company services approximately 40% of the Russian market.
The Scandinavian Rezidor Hotel Group, which manages around 200 hotels in 40 countries, plans to build another 50 hotels in Russia within eight years. Danish and Swedish investment funds and the Rezidor Hotel Group itself will finance the project on equal terms. In the near future, the company plans to build six or seven hotels under the Park Inn brand name.
Danish investors have put about $1 billion in the Russian economy (more than half of which is direct investment to build new production facilities). In addition, the Danish government spends about $250 million on environmental, energy and social services projects in Russia.
A major event in bilateral trade and economic relations was the acquisition of the Danish company DanSteel by the Russian Novolipetsky Steel Plant in 2002. DanSteel produces steel plates in the town of Frederiksvaerk. Supplies of ferrous metals to Denmark have grown considerably as the plant has achieved its planned capacity. Moreover, the Russian company Agromashholding, part of the Traktornye Zavody company, bought an 80% stake in the Danish company Silvatec from its parent company Hedeselskabet in April 2006 for $15 million. Silvatec is the only manufacturer of logging vehicles and equipment in Denmark.
There is a favourable environment for major Russian-Danish projects. In April 2007, the Danish state power company DONG Energy signed a contract with Gazprom to export one billion cubic metres of natural gas per year to Denmark through the Nord Stream pipeline for 20 years, starting in 2011. The 2007 contract also allows gas exports to be increased to three billion cubic metres per year if there were sufficient technical capabilities and gas supplies. This option allowed Gazprom to sign a supplementary agreement based on the 2007 agreement with DONG Energy on September 30, 2009 for the sale of an additional one billion cubic metres of gas per year for 18 years, starting in 2012.
Moreover, another agreement was signed concurrently with the 2007 agreement, allowing DONG Energy to supply 600 million cubic metres of natural gas per year to Great Britain through the Gazprom distribution network for 15 years, beginning in 2007. As of October 1, 2007, Gazprom Marketing and Trading has been supplied with natural gas in the UK through the Langeled gas pipeline, which transports gas from the Norwegian Ormen Lange field, in which DONG Energy has a 10% stake.
A bilateral, intergovernmental council for economic cooperation has also been set up. The chairman of the Russian delegation is Russian Transport Minister Igor Levitin and, beginning April 1, 2009, the new chairman of the Danish delegation is Claus Grube, who serves as Permanent Secretary of State for the Ministry of Foreign Affairs of Denmark. The seventh and most recent session of the intergovernmental council took place in Moscow from February 7 to 8, 2008, and the eighth session is planned for January 18-19, 2010, in Copenhagen.
The two countries also work closely with regard to fishing near the Faroe Islands and Greenland. In November 2008, Arkhangelsk hosted the 32nd session of the Joint Russian-Faroese Fishing Commission and the 17th annual Russian-Greenland Consultations on Fishing Agreements. The next session of the Joint Russian-Faroese Fishing Commission is planned for November 30 through December 1, 2009, in Torshavn, while the next annual Russian-Greenland Consultations on Fishing Agreements are planned for December 3 through 4, 2009, in Copenhagen.
Russian constituent entities are also working to build ties with Denmark. A special working group under the auspices of the intergovernmental council has been set up to further strengthen ties at the regional level.
A considerable amount of Danish capital has gone to projects in St Petersburg, particularly environmental projects (establishing a system for preventing and combating oil spills in the Gulf of Finland, rebuilding a facility to process hazardous waste from the Krasny Bor nuclear plant), energy efficiency projects (renovating buildings to make them more energy efficient, modernising the electrical grid and oil and gas power plants in St Petersburg) and education, as well as social projects. Denmark also provided $1.2 million for the restoration of the main parade ground of the Winter Palace (about two thirds of the project's money) in honour of the city's 300th anniversary. During a November 2006 visit to Denmark, St Petersburg Mayor Valentina Matviyenko signed a memorandum of understanding between the government of St Petersburg and the Danish company F.L. Smidth regarding the construction of a cement plant, as well as an agreement between the St Petersburg Chamber of Commerce and Industry and the Confederation of Danish Industrialists.
Denmark has launched joint projects with the Leningrad Region in energy, manufacturing, environmental protection, transport, construction, textiles, trade, tourism, etc. In agriculture, joint projects have focused on environmentally friendly pig farming and the establishment of several advisory centres for farmers in communities in the region, as well as poultry farming and greenhouse agriculture.
Cooperation with the Kaliningrad Region has been another priority for Denmark. Energy, environmental protection, eco-tourism, education and social projects have all been carried out in the region, and Denmark and the Kaliningrad Region are working more closely together in transport and agriculture. An organisation providing Danish technological assistance has been operating in Kaliningrad since October 2001, allowing Denmark to provide more than $10 million worth of technological assistance to the region over the last 10 years, particularly in agriculture, food-processing, the social sector, energy and environmental protection.
Steps have also been taken to increase cooperation with the Pskov Region. New environmental, agricultural, social and transport projects are planned.
The 2005 to 2010 assistance programme for the economic development of the Kaliningrad and Pskov Regions (developed by the Ministry of Foreign Affairs of Denmark) provide $21 million for 2007 to 2010.
Denmark is also strengthening its ties with the Krasnodar Territory. The regional administration has successfully drawn on Danish agricultural experience, above all in pig farming.
The Danish company Vestforsyning is involved in projects to increase energy efficiency and modernise heating supply networks in the Voronezh Region.
Finally, Danish companies have traditionally had a strong commercial presence in Moscow, with branch offices of more than 100 Danish companies registered in the city. A production facility for the Dirol and Stimorol chewing gum run by the company Dandy is located in Novgorod.