The German industry is aiding Russia modernization of its energy sector and in energy efficiency, an alliance that could boost their respective exchange traded funds (ETFs).

German foreign minister Frank-Walter Steinmeier traveled to Russia to meet with new President Dmitri Medvedev to talk about modernizing the Russian economy and reducing its dependence on energy and commodities as the country’s main source of growth, reports Judy Dempsey on International Herald Tribune.

The relationship between Russia and Germany shows the respect Russia has for Germany and Social Democrats in particular. Trade between the two countries is flourishing: German exports to Russia totaled $37 billion last year. In 2006, they totaled $32.9 billion.

Russian exports to Germany, however, slipped: in 2006, they were at $46.9 billion, but in 2007, they slipped to 44 they were  in 2007, they were at $44.8 billion.

If Russia can revamp its energy strategy,will the Market Vectors Russia (RSX) be able to give back? Energy has a large stake in the ETF, at 37.3%. iShares MSCI Germany Index (EWG) may also get a boost from the partnership.

RSX is up 14.8% year-to-date, while EWG is down 3.8%.

For full disclosure, some of Tom Lydon’s clients own shares of RSX.

Tags: Eastern Europe, Energy, Europe, EWG, Germany, Russia, Sector ETFs