German economy struggles for doing business with Iran

2010/01/22

Published in Handelsblatt issue of January 22 2010 (German)

While the German government considers sanctions against Iran, the economy bids for orders from Tehran. Due to increasing political pressure many companies do their business with Iran behind the scenes.
by Andreas Rinke and Mathias Brüggman

BERLIN. Again, Germany’s Iran policy causes tensions between the economy and the government.
While Federal Chancellor Angela Merkel is preparing the public for new sanctions against Tehran, German companies behind the scenes continue their struggle to get major orders in those fields that are not yet sanctioned. More and more often, however, such deals are targeted and made public by third parties in an attempt to create political pressure in order to motivate those companies to cancel their contacts with Iran.

For example, prior to the visit of Israel’s Prime Minster to Berlin, news emerged that the subsidiary of HHLA, a company owned with a majority stake by the city of Hamburg, was about to receive an order from Iran. Following the political pressure, the company named HPC Hamburg Port Consulting had to cancel the preliminary contract with Iran. Israel had massively criticized this deal with Iranian Tidewater that aimed to upgrade Iran’s major port Bandar-Abbas.

On Wednesday, reports about an order for gas turbines placed with Siemens – though from 2007 – caused a stir. The NGO “Stop the Bomb” that opposes to Iran’s alleged nuclear enarmament, denounces the activities of the Thyssen-Krupp subsidiary Uhde in the field of plant construction.

Although the talk is still about legal business, the German economy has been complaining for years that the Federal Government abandons them as soon as the USA or Israel create pressure.
“It is wrong to use economic sanctions as a tool to solve the problems that politics have failed to solve”, says Daniel Bernbeck, director of the German-Iranian chamber of commerce in Tehran. He adds that the sanctions that are currently being considered against the Iranian gas and oil sector, and an embargo on gasoline would hurt the population, not the leadership. Moreover, every embargo is bypassed anyway, he says.

German exports to Iran in the period between January through October 2009 fell by 9% compared to the previous year, amounting to 2,9 billion Euro. However, such figures become less significant, because companies worldwide due to the increasing political pressure more and more often resort to doing business via third countries such as China. This is said to also apply to US companies.

What most of all alarms German companies now are remarks of chancellor Merkel that she made earlier this week, saying that, if necessary, Germany together with friend countries will impose new sanctions on Iran even without a respective UN resolution. It is not even ensured whether this will be implemented in a joint action of all EU members. In the UN, it is China that delays sanctions, in the EU it is Spain, Italy and the Scandinavian countries.

The industrial sector, however, in times of crisis does not think much of the federal government’s course of “disincentive”, according to which German companies should deliberately withdraw from business with Iran even without existing resolutions about sanctions. “Germany’s economy does adhere to all sanctions issued so far, and will implement possible future stricter sanctions as well”, says Oliver Wieck, expert on foreign trade at BDI [Federation of German Industry]. “In a rule of law state like Germany, however, a tightening of export controls should be achieved through respective laws and regulations.”

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