BERLIN, July 8 (Reuters) - A treaty to be signed between Germany and Russia will protect German exporters from billions of euros in losses they would otherwise incur due to a credit crunch in Russia, a German business expert said on Wednesday.
Klaus Mangold, head of the Committee on Eastern European Economic Relations, said that financing problems in Russia were threatening German firms with some five billion euros ($7 billion) of losses.
"Russian firms are suffering strongly from a credit crunch and are having growing difficulties undertaking imports, even though advance payments have already been partly made," he said.
The treaty is to be signed by German Chancellor Angela Merkel and Russian President Dmitry Medvedev at a scheduled summit next week in the southern German city of Munich. Under the plan, a branch of German state-owned bank KfW will extend over 500 million euros credit to Russia's clearing house for crisis bailout funds, Vneshekonombank (VEB), to help firms pay for import orders.
"It is not a solution to all the problems, but it is an important breakthrough," Mangold said.
For years Russia was Germany's fastest growing export market, but exports fell by a third in the first quarter of this year under the weight of the financial crisis.
In a poll conducted by Mangold's group, almost half of all companies said that Russian partners had either cancelled orders or have had projects endangered. (Reporting by Rene Wagner, writing by Brian Rohan)