U.S. ambassador and sanctions cause drop in German-Iran trade

9% drop in German exports to Iran.

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March 31, 2019 01:42
3 minute read.
U.S. ambassador and sanctions cause drop in German-Iran trade

U.S. Ambassador to Germany Richard Allen Grenell is pictured in Berlin, Germany, June 4, 2018. Picture taken June 4, 2018.. (photo credit: REUTERS)

 
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NEW YORK – An assertive anti-Iranian regime policy by the US Ambassador to Germany and American sanctions targeting the Islamic Republic of Iran’s economy caused a 9% decrease in German exports to Iran in 2018.

According to Ulrich Nussbaum, a state secretary at the Federal Ministry for Economic Affairs and Energy, German exports plummeted from €3.15b in 2017 to €2.7b in 2018.

The German weekly Die Zeit first reported on the drop in German exports to Iran. The governments of Germany, France and the United Kingdom created a financial mechanism called Instex to circumvent US sanctions against Iran. Nussbaum said Instex is “at this time in the phase of being operationalized.”

Major German financial institutions including Commerzbank and Deutsche Bank have declined to conduct business with Iran because of exposure to US sanctions. As a result, according to an early March article in the Hamburger Abendblatt, for companies in the German state of Lower Saxony this presents a “big challenge.” The paper wrote “since November, virtually no transfers of funds from Iran to the house banks of the Lower Saxony companies have taken place.”

Mid-level German companies have over the years exported engineering equipment to Iran. Tilman Brunner, a foreign trade expert for the chamber of commerce in the capital of Hanover in Lower Saxony, said: “Many companies would like to do more Iran business,” adding they have contracts, but could not process the payments. He said that’s why there are many requests for the chamber of commerce and a lot of business frustration.

Exports from Lower Saxony to Iran increased in the first half of 2018 to €197m from €181m in 2017, said Brunner. But the trade sunk massively in the second half of 2018 due to US sanctions.

“You can see that the sanctions are immediate,” said Brummer, noting, above all, companies that had significant US business and feared reprisals withdrew from the Iranian market.

The decline in German-Iranian trade also coincided with the arrival of US Ambassador Richard Grenell to Germany in May, 2018. Grenell said at the time “US policy is that German and European companies should stop doing business with Iran.”

Grenell’s advocacy of US policy has produced a running list of high-profile German companies pulling the plug on their Iran business or slashing significant commerce. Brand name companies such as the German telecommunications giant Telekom, Volkswagen, BMW, Karcher, BASF, SMS Group, Munich Re, IMS Deutschland, Siemens and Daimler are some of the examples of withdrawing from Iran’s volatile market.

Grenell also stopped Chancellor Angela Merkel’s administration from sending over $400 million in cash to Iran’s regime to bypass US sanctions in November. The ambassador played a decisive role in forcing the German authorities to prevent Iran’s Mahan Air from using German airports due to Mahan’s role in aiding the Syrian regime in its war crimes against civilians.

The US government classifies Iran’s clerical regime as the leading state-sponsor of terrorism. The US withdrew from the Iranian nuclear deal in 2018 and re-imposed economic sanctions on the mullah regime in 2018.

The Jerusalem Post reported last year that the German company Krempel Group pulled out of Iran after media coverage about its role in a chemical weapons scandal. Equipment from the Stuttgart region-based Krempel Group was discovered in Iranian rockets used in two chemical attacks on Syrian civilians in 2018. The poison gas attacks injured 24 people.

Germany’s Federal Office for Economic Affairs and Export Control (Bafa) defended the sales to Iran because the material was not designated as dual-use merchandise that can be applied for military and civilian purposes.

In May, the German-Iranian chamber of commerce will hold a seminar on “Iranian commercial law in times of crisis” with Dr. Alireza Azimzadeh, the executive director of the Tehran-based consulting company Persia Associates and Persia Consulting. German chambers of commerce frequently hold seminars on how to expand trade with Iran and circumvent US sanctions.

Germany’s foreign ministry under the social democratic foreign minister Heiko Maas celebrated the 40th year anniversary of Iran’s revolution in February. Writing in the Washington Examiner in early March, the Washington-based American Enterprise Institute scholar and Iran expert Michael Rubin said “For German authorities, the primary goal is commercial benefit. The execution of gays, slaughter of Jews, repression of other minorities, and terrorism are inconveniences to ignore.”

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