AUS DEM SPIEGEL
Ausgabe 31/2007

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.

By , and


Frankfurt's Financial District. Banks in Germany are coming under pressure from Washington not to finance business with Iran.
DPA

Frankfurt's Financial District. Banks in Germany are coming under pressure from Washington not to finance business with Iran.

US Under Secretary of the Treasury Stuart Levey is a well-groomed man with polite manners. While touring Europe’s capitals this summer, the 44-year-old’s graying hair is always perfectly parted and he prefers the genteel blue suits favored by bankers.

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 he’s 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 Treasury’s first under secretary for terrorism and financial intelligence, Levey’s 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 Washington’s war on terror, Levey’s 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.

While in Berlin, Levey met with Thomas Mirow, a senior official at the Finance Ministry, and Chancellor Angela Merkel’s foreign policy advisor Christoph Heusgen. During those talks, he demanded Germany cut its so-called Hermes export credit insurance coverage when it came to deals with Iran. Under ex-chancellor Gerhard Schröder, Germany dramatically increased the permitted volume of export credit insurance. Moreover, Levey told the officials that Washington wanted Germany to scale back all of its other economic ties with Iran as quickly as possible.

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
DER SPIEGEL

German-Iranian trade volume

And Levey hasn’t just been knocking on the doors of government ministries while in Europe -- he’s also been visiting the continent’s captains of industry. While in Germany he went to the country’s financial center Frankfurt to try to persuade the bankers there not to do business with Iran. German financial institutions feel the United States government has been engaging in "downright blackmail," according to one banker. Anti-terror officials from the US Treasury are constantly showing up to demand they cut their traditionally good relations with Iran. The underlying threat from the men from Washington is that they wouldn’t want to support terrorism, would they?

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 didn’t 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.

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