Twisting Arms: US Pressures Germany to Cut Iran Business Ties
The United States is using rough-handed methods to force Germany to impose tougher sanctions on Iran. The government in Berlin is resisting, but German banks are already caving in.
Frankfurt's Financial District. Banks in Germany are coming under pressure from Washington not to finance business with Iran.
Levey was in Berlin in mid-July, but none of the German officials he met with were particularly pleased to be visited by the man with the Harvard law degree. And Levey knows hes not particularly welcome on this side of the Atlantic: Sometimes I get the feeling people would just prefer to throw me out.
Appointed a few years ago as the US Treasurys first under secretary for terrorism and financial intelligence, Leveys office -- a mixture of think tank and intelligence service -- was set up to tackle the financing of terrorism, as well as money laundering and counterfeiting.
Besides looking for allies for Washingtons war on terror, Leveys people also circle the globe visiting government officials in an attempt to isolate so-called rogue states pursuing weapons of mass destruction (WMD). Top on the agenda is Iran, a country thought to have ambitions to develop nuclear weapons.
Building an Economic Coalition of the Willing
But the US government is no longer content with United Nations economic sanctions on Tehran -- Washington wants more. And so, US President George W. Bush and Treasury Secretary Henry Paulson have directed Levey to form a worldwide economic coalition of the willing to increase the pressure on Iran. Despite their best efforts, American officials are irked that German companies are still doing business worth billions with Tehran. In particular, Washington has little understanding for the export guarantees Berlin still offers firms, effectively helping the mullah regime to buy new ships and power plant technologies.
But Levey ran into resistance from the Germans, who said his demands were understandable coming from a country that has no trade with Iran. Germany, however, exports more than 4 billion ($5.45 billion) in goods to the country each year, creating thousands of jobs. Were Germany to end its Hermes export guarantees, German locomotives might no longer be delivered to Iran, but Chinese and Russian companies would gladly step into the breach. The Americans would end up gaining nothing, while the German economy would stand to lose a lot. Besides, explained the Germans, the Hermes cover has been excluded from UN sanctions against Iran. In short, Levey could forget his request -- Germany would stick to the UN resolutions, but would do no more. But officials in Berlin know they have to come up with something to placate Washington and so both the chancellery and the foreign ministry are looking into a sweeping weapons embargo. That might be just enough to appease the Americans.
German-Iranian trade volume
But there are no plans to stop financing German exports to Iran. "Of course our member institutions respect all sanctions set out in the UN resolutions," says a spokesman for the Association of German Banks. However, that didnt stop Deutsche Bank, along with German industrial heavyweights BASF and Siemens, from being put on a list by the US Securities and Exchange Commission (SEC) for having contacts with Iran. "No investor should ever have to wonder whether his or her investments or retirement savings are indirectly subsidizing a terrorist haven or genocidal state," said SEC Chairman Christopher Cox in a statement last month.
The SEC labeled Iran, Syria, Sudan, North Korea and Cuba "state sponsors of terrorism" on its Web site. A click on the name of one of the countries would then produce a list of foreign companies with US stock market listings that did business with that particular rogue state.
- Part 1: US Pressures Germany to Cut Iran Business Ties
- Part 2: German Banks Wind Down Business with Iran
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