Iranian President Mahmoud Ahmadinejad admires Germany and German history. He has a particularly keen interest in the Nazi era. He calls Adolf Hitler a fascinating figure. In his opinion, the Holocaust never happened.
Ahmadinejad's confused views of the world and its history have helped considerably to make products made in Germany so popular in the Islamic state. German companies, primarily in the fields of mechanical engineering and chemicals, are Iran's leading Western trading partners. Germany supplies Iran with roughly the same amount of goods as France and Italy combined -- the countries that occupy second and third place in the export statistics. During the first eight months of this year alone, Germany exported goods to Iran worth 2.055 billion ($2.75 billion), according to the latest statistics from the German Economics Ministry.
The question is what Ahmadinejad is doing with all the goods that he purchases from his German business friends. True, trade with Iran is subject to strict limitations: Everything that could serve a military purpose is banned, and the energy and financial sectors are largely off limits. But the United States and Israel feel that this partial embargo doesn't go far enough. They accuse the Germans of economically stabilizing Ahmadinejad.
EU To Discuss Next Steps on Iran
The situation has been coming to a head ever since the International Atomic Energy Agency issued an alarming report last week on the progress that Iran is making with its nuclear program. On Monday, European Union foreign ministers are set to meet in Brussels to debate the next steps against Iran. As the leading European exporter to Iran, and the country with the largest historical responsibility for Israel, Germany is the main focus of these talks. German Economics Minister Phillip Rösler of the business-friendly Free Democratic Party (FDP) realizes that trade with Iran could soon be halted. "Germany will play an active role in calling for tougher sanctions against Iran," Chancellor Angela Merkel's spokesman Steffen Seibert announced.
From the perspective of German industry, the question of course arises why the trade in civil goods with Iran should be left to the competition. For the time being, the "strategy of discouragement" pursued by German Chancellor Angela Merkel has hurt German companies more than it has made the mullahs suffer. Major players like Deutsche Bank, leading gas and engineering firm Linde and steelmaker and industrial giant ThyssenKrupp have withdrawn from Iran, but the gaps that they left behind were quickly filled by Russian and Chinese companies.
An effective measure would be if the United Nations tightened its sanctions. But the German government doesn't believe this will happen. The UN sanctions already lag behind what the EU has imposed. Officials in the German Foreign Ministry say that they presume further steps will fail in the face of resistance by Russia and China in the UN Security Council, where both countries have veto powers.
German Foreign Minister Guido Westerwelle is thus considering a number of more minor ways to ratchet up sanctions. He says that he rates the European policy of sanctions as a partial success because it has at least slowed down Iran's nuclear program. Westerwelle also argues that additional members of the Iranian regime could be banned from traveling to Germany and their bank accounts could be frozen. He says it is also possible to expand the list of goods that are banned from being exported to Iran. Meanwhile, officials in the Economics Ministry say that Rösler agrees in principle that the threat of the Iranians developing a nuclear bomb should be met with a tougher boycott, as long as "the fulfillment of previously authorized contracts is not overly affected."
Isrealis to Suggest Further Sanctions
This month an Israeli delegation will travel to Berlin to make proposals on how the sanctions could be further tightened. The Israelis are expected to deliver a list of names that includes companies and individuals who they say help prop up the Iranian regime.
The Israelis' most far-reaching demands are directed against the Iranian central bank, the oil trade and Iran's elite military force, the Revolutionary Guards. "Now is the time to extend the breadth and depth of the regime of sanctions," says Israeli Deputy Prime Minister Dan Meridor. "Iran needs trade and exchange." He says that the world should use this leverage. "The volume of trade that exists between certain European countries and Iran could be used as such leverage," says Meridor.
Shaul Mofaz, the chairman of the Foreign Affairs and Defense Committee of the Knesset, the Israeli parliament, visited Berlin last summer. In the corridors of the Bundestag, Germany's federal parliament, he ran into a parliamentary delegation from Iran. He wasn't pleased at the time. "Germany has to have a clear policy toward Iran," says Mofaz. "It should support tough sanctions."
In a number of cases, Israel has supplied concrete information on how goods exported by Germany are used for dubious purposes. Israel's foreign intelligence agency, the Mossad, supplied photos of German trucks that the Revolutionary Guards have modified to use as rocket launch ramps. The German government subsequently banned the export of heavy trucks to Iran. For Daimler, whose Actros line of heavy trucks is coveted worldwide, the ban on exports meant millions of euros in losses. In a letter addressed to the Foreign Ministry, Daimler asked for the heavy trucks to be removed from the sanctions list, but to no avail.
The forced closure of the Hamburg-based European-Iranian Trade Bank (EIHB) last spring was also the result of dossiers that were made available to the German government by Israeli, American and British intelligence agencies. Germany's Federal Financial Supervisory Authority (BaFin) conducted its own research and concluded that there was insufficient evidence of illegal business transactions to warrant taking measures against the EIHB. But Israel increased the pressure until the Iranian bank ended up on the European sanctions list. Since May the bank has been prohibited from engaging in new business. All accounts have been frozen. EIHB is challenging these actions before the European Court of Justice.
Hardships for the Iranian People
The example of this Hamburg-based bank also reveals, though, where the boundaries lie for European sanctions policies. International payments, which often used to pass through Germany, are simply routed outside the EU. Sales of oil between Iran and India are now handled by the Russian Gazprombank, instead of the EIHB.
The EIHB ban has created problems for German companies like NNE Pharmaplan, though, a manufacturer of medical instruments located in the central German town of Bad Homburg, but with a parent company in Denmark. It manufactures blood filters for patients suffering from kidney failure. The company supplies a pharmaceutical production plant in Karaj, less than an hour's drive west of Tehran, and estimates that 15,000 Iranian dialysis patients depend on its products.
Once every month, NNE Pharmaplan normally ships the high-tech membranes for the blood filters to Iran by truck. But since September all business has been stopped because the deliveries from June, July and August have not been paid. The unpaid bills amount to a total of 3 million. Due to the sanctions imposed against it, the European-Iranian Trade Bank, which used to handle the transfers of payment, has run out of money. There are now additional membranes in storage worth 2.5 million that should have actually been delivered long ago.
The company is considering halting its production. Until now, one-third of its business has been with Iran. Now, many of the firm's approximately 100 employees are afraid of losing their jobs. Attempts to reestablish monetary transactions via banks in the United Arab Emirates or France have failed.
"We've considered entirely abandoning our business with Iran, but we also feel a sense of responsibility to the customer and the patients in Iran," says the director of sales and marketing, Georg Jakobi. He warns that toward the end of the year stocks of the membrane in Iran will be depleted, jeopardizing the patients' medical care.
Cases like this explain why the German government is hesitating to isolate the Iranian central bank from international monetary transactions, as is currently under debate in Israel and the US. One member of the German government said that he fears a total boycott would create hardships for the Iranian people: "That would then unite the entire country against the West."
Reported by BASTIAN BERBNER, JULIANE VON MITTELSTAEDT, ALEXANDER NEUBACHER, RALF NEUKIRCH, HOLGER STARK, DANIEL STEINVORTH