Berlin hardens trade stance with Iran

Berlin hardens trade stance with Iran

By Bertrand Benoit in Berlin
Published: 11/2/2008 | Last Updated: 11/2/2008 18:20 London Time

Germany is cracking down on business with Iran far more systematically than suspected, unpublished figures from the economics ministry showed on Monday.

The new data show a dramatic drop in export credit guarantees granted to German exporters doing business with Iran last year, and a steady drop in exports to the country since 2005.

The confidential figures and a statement by deputy minister Walther Otremba, both obtained by the Financial Times, were provided to the opposition Free Democratic party's parliamentary group last week after it filed a formal request for information.

The FDP is concerned that the government may be putting more informal pressure on German companies doing business with Iran than required by United Nations sanctions aimed at forcing Tehran to lift the lid on its nuclear programme.

According to the statistics, Berlin issued export credit guarantees backing trade with Iran worth €503.4m ($730.2m, £374.8m) last year, a drop of more than 50 per cent from €1.16bn in 2006 and just 20 per cent of the level of 2004.

The total amount of guarantees issued for trade with Iran has fallen from €5.8bn to €5.2bn since 2005. German exports to the country have also fallen in the past three years. Between January and November 2007, they totalled €3.2bn against €4.3bn in 2005.

The drop in exports is untypical for Germany, which is the world's largest exporter of goods and virtually the only western economy to have seen its share of global trade increase in the past decade. The figures should assuage US suspicions that European governments are dragging their feet in putting pressure on Iran.

Although Germany, like the UK, does not actively discourage companies from doing business in Iran, "the sanctions decreed by the United Nations . . . and the related decisions of the European Union have resulted in particularly stringent reviews of requests [by German companies] for export authorisations", Mr Otremba wrote in his response to the FDP.

In addition, the ministry said: "We are now looking at the financial risks involved in granting export guarantees for Iran much more closely."

Elke Hoff, an FDP member of parliament, told the FT her party was concerned that German companies might be indirectly paying the price for Washington's refusal to engage in direct talks with Tehran on the nuclear dispute.

"At the very least, we should establish legal clarity for companies whose businesses are legitimate, legal and present no proliferation risks but that are now suffering from informal sanctions," she said.

Iran was only Germany's 40th biggest export market in 2006, according to figures from the Federal Statistical Office, with exports to the country totalling €4.15bn. The Islamic Republic is Germany's 75th biggest source of imports. But Germany has been the biggest exporter to the country for the past 30 years. Iranian experts think China could have taken its place last year.