Germany, Iran Still Major Trading Partners, Despite Sanctions

Germany, Iran Still Major Trading Partners, Despite Sanctions 

Germany has been heavily involved in the international efforts to halt Iran’s suspected nuclear weapons program. However, it continues to be one of the Islamic Republic’s largest trading partners.

Despite new rounds of UN and EU sanctions in 2010 and the fact that several major German firms retreated from Iran, trade between the two countries increased last year.

„Instead of putting all possible pressure“ on Iran, says Matthias Küntzel ,a political scientist from Hamburg, „the German government seems to want to go on doing only what it is obliged to do by the UN or the EU“. [1]

German industry representatives, for their part, have lobbied against any tough unilateral restrictions by the government on trade.

Merkel halts India-Bundesbank Iran oil deal following pressure

In the latest development, Handelsblatt business daily reported on tuesday that German Chancellor Angela Merkel had intervened to stop billions of euros of Indian oil payments from reaching Iranian accounts via Germany. [2] These payments have been made through the Hamburg-based Europaisch-Iranische Handelsbank (EIH).

EIH has come under scrutiny in the past and more recently since it emerged that Berlin had allowed India to pay for billions of euros of oil purchases from Iran via the bank which is under US sanctions. [3]

While the US has sanctioned the ban the EIH is not blacklisted by the EU, much to the consternation of the US. Although Washington claims that the EIH is one of the most important financial conduits in Europe for Iran’s nuclear and missile programs, German officials have  stated — prior to tuesday’s report — that they cannot halt the transactions for lack of evidence that the money is indeed being used for nuclear operations. [4]

According to information received by SPIEGEL ONLINE, the India payment deal was connected with the release of two German journalists detained in Iran. [5]

The two were arrested in Iran in October 2010 because they interviewed the son of Sakineh Mohammadi Ashtiani, an Iranian woman sentenced to death by stoning for adultery.

German Foreign Minister Guido Westerwelle personally met Iranian President Mahmoud Ahmadinejad and picked up the two German journalists earlier this year – a move condemned by the Iranian opposition group National Council of Resistance of Iran. [6]  

According to SPIEGEL ONLINE, additional background discussions took place in connection with the visit concerning the intermediary role the Bundesbank would play in payments for Iranian oil exported to India. [7]

Trade increases in 2010, too

Germany, traditionally Iran’s most important EU trade partner, has long been under fire for its close business ties with the Islamic Republic, with the country’s exports there totaling 3.8 billion euros in 2010. [8]

German imports from Iran climbed to 690 million euros in the first 10 months of last year, surpassing by 28% the total 2009 import volume. German exports to Iran rose 5% to 3.164 billion euros between January and October 2010. [9]

Last November, the Marriott Hotel in Hamburg hosted the „Iran Business Forum,“ organized by the Berlin-based company IPC-GmbH, to jump-start „investment possibilities in the northwestern provinces of Iran“. [10]

Major German corporations still doing business with Iran

In October 2009, the Wall Street Journal said some 85 German companies have operations in Iran, while more than 7,000 companies conduct business there through local representatives. [11]

In March 2010, The New York Times published a list of 74 corporations that have done business both in Iran and with the US government over the last decade. German companies on the list included: BASF, Bayer, Bosch, Evonik, Lufthansa, Nokia-Siemens. [12]

Nokia-Siemens, the Finnish-German telecoms joint venture, was at the center of an ethics controversy in 2009 when it emerged that it had supplied surveillance technology to two Iranian mobile phone operators. The technology was used to track down dissidents amid the mass protests following the disputed reelection of President Mahmoud Ahmadinejad in June 2009. [13]

In August 2010, the US Treasury blacklisted 21 state-owned Iranian companies operating in different countries, including nine companies based in Germany. [14]

For further information on German companies that enable Iran’s nuclear program and infrastructure, see Realite-EU’s release.

Some major German companies pulling out of Iran

German companies are coming under growing pressure to cut or reduce ties with Iran, due to international sanctions aimed at halting Iran’s suspected nuclear program.

Last year, several companies withdrew their business from Iran.

In October, German chemical trader Helm AG announced it had ceased all petrochemicals trade with Iran. [15]

In September, Germany’s largest steelmaker ThyssenKrupp announced that it would terminate existing „interests“ in Iran and refrain from signing new contracts with clients in Iran. [16]

In September, German gas and engineering firm Linde announced that it would end its business operations in Iran. ^[17]

In April, Luxury carmaker Daimler announced plans to sell its 30 percent stake in an Iranian engine maker and freeze the planned export to Iran of cars and trucks.[18]

The announcement followed similar action by German insurers Munich Re and Allianz. [19]

In January, German engineering conglomerate Siemens said it would not accept future orders from Iran. [20]

Resistance from German business community

Fearing to lose a lucrative market, German industry representatives have lobbied against any tough unilateral restrictions by the government on trade. Such moves, they argue, would endanger German jobs and allow Chinese and other rivals to move in.

„What’s important is that German companies aren’t put in a worse position than those in other countries,“ said Felix Neugart, director of North Africa and Middle East affairs for the Association of the German Chambers of Industry and Commerce. [21]

The spokesperson for lobbying group German Engineering Federation, Ulrich Ackermann, said, „What our members want is a level playing field. If our German companies pull out, will other, non-German companies replace us?“ [22] 

 

 

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References:

[1] „Who is Who in German trade with Iran?“, Matthias Küntzel, February 4, 2010,

 http://www.matthiaskuentzel.de/contents/who-is-who-in-german-trade-with-iran

[2] „Merkel intervenes to stop Iran bank trade –report“, Reuters, April 5, 2011,

http://www.reuters.com/article/2011/04/05/germany-israel-iran-idUSLDE73404S20110405

[3] ibid

[4] „U.S. Presses Germany to Block Indian Payments to Iran for Oil“, The New York Times, March 31, 2011, http://www.nytimes.com/2011/03/31/business/global/31iht-iranoil31.html?_r=3&src=busln

[5] „Germany’s Role in a Business Deal with Iran“, Spiegel Online, April 1, 2011, http://www.spiegel.de/international/germany/0,1518,754571,00.html

[6] „Germany reacts to criticism of Iran trip“, UPI, February 22, 2011,

http://www.upi.com/Top_News/Special/2011/02/22/Germany-reacts-to-criticism-of-Iran-trip/UPI-90701298398736/

[7] „Germany’s Role in a Business Deal with Iran“, Spiegel Online, April 1, 2011, http://www.spiegel.de/international/germany/0,1518,754571,00.html

[8] „Angela Merkel stops India-Bundesbank Iran oil deal: Report“, AFP, April 5, 2011

 http://economictimes.indiatimes.com/news/economy/indicators/angela-merkel-stops-india-bundesbank-iran-oil-deal-report/articleshow/7873380.cms

[9] „The Italo-German Double Game in Iran“, The Wall Street Journal, January 18, 2011,

http://online.wsj.com/article/SB10001424052748704415104576065222196277218.html?mod=googlenews_wsj

[10] ibid

[11] „German Firms Feel Pressure Over Tehran Trade“, The Wall Street Journal, October 3, 2009, http://online.wsj.com/article/SB125453243290661095.html

[12] „Profiting From Iran, and the U.S.“, The New York Times, March 12, 2010,

http://www.nytimes.com/interactive/2010/03/06/world/iran-sanctions.html

[13] „Nokia-Siemens Rues Iran Crackdown Role“, EUobserver, June 3, 2010,

http://www.businessweek.com/globalbiz/content/jun2010/gb2010063_509207.htm

[14] http://useu.usmission.gov/treasury_080310.html

[15] „Germany’s Helm AG ceases petrochemical trade with Iran: sources“, Platts, October 7, 2010 http://www.platts.com/RSSFeedDetailedNews/RSSFeed/HeadlineNews/Petrochemicals/8038369

[16] „ThyssenKrupp stops business with Iran“, Press release, September 23, 2010,

http://www.thyssenkrupp.com/en/presse/art_detail.html&eid=TKBase_1285224188372_1690828183

[17] „German gas giant Linde will pull out of Iran“, AFP, September 10, 2010, http://www.google.com/hostednews/afp/article/ALeqM5jDEs5QZA6wl8Z_9s8JyBfLxwgivA

[18] „FACTBOX-Foreign companies stepping away from Iran“, Reuters, July 14, 2010,http://www.reuters.com/article/2010/07/14/iran-sanctions-companies-idUSLDE66D05020100714

[19] ibid

[20] ibid

[21] „German Firms Feel Pressure Over Tehran Trade“, The Wall Street Journal, October 3, 2009, http://online.wsj.com/article/SB125453243290661095.html

[22] „In Response to Iran’s Nuclear Program, German Firms Are Slowly Pulling Out“, The New York Times, February 2, 2010, http://www.nytimes.com/2010/02/03/business/global/03sanctions.html?_r=1&sq=iran&st=cse&adxnnl=1&scp=2&adxnnlx=1301997907-SwSZM+3E7OJt98NGd4alng