Analysis: Germany's economic relations with the mullahs

The open secret that Germany is supporting the Iranian economy presents a host of problems for Olmert.

olmert merkel brill224.8 (photo credit: AP [file])
olmert merkel brill224.8
(photo credit: AP [file])
Prime Minister Ehud Olmert went to great lengths to avoid a diplomatic dispute with Germany on Iran's nuclear program this week, during his second visit to Berlin in 14 months. While Chancellor Angela Merkel has affirmed Israel's right to employ force in Gaza against the Kassam rocket fire, she prefers a strategy of diplomacy and sanctions to pressure the Iranian regime to stop uranium enrichment. Olmert, who said Israel "cannot afford to ignore" Iran or to "make one mistake," said he appreciated Merkel's "deep perception of what we are facing" in Israel. But the gap between Olmert and Merkel was put into stark relief when Olmert did not dismiss the idea of a military strike against the theocracy in Teheran. "His definition is very interesting," said Olmert in a reference to US President George W. Bush's recent statement that "no option is ruled out" in seeking to thwart Iran's drive for nuclear arms. When Bush visited Israel last month, he said the US would defend Israel in the event of an Iranian attack. The notion of a solid alliance between Germany and Israel is seen in different terms in Germany. While meeting with Olmert, Merkel and her party colleague Parliament President Norbert Lammert stressed the "special relationship" between the countries. Lammert said this relationship "goes beyond good, reliable bilateral relations" and Israel's existence overrides German business interests. Yet Olmert's visit, and the pressing threat of a nuclear-armed Teheran, exposed the fault lines in German-Israel relations. The 800-pound gorilla in the room is Germany's solid economic relationship with the mullahs. Perhaps in an effort to blunt the damage caused by Germany's technological and material support for the Islamic Republic's economy, Olmert's visit coincided with the release of figures by Deputy Economics Minister Walter Otremba showing both a drop in German export credit guarantees supporting trade with Iran and a shrinkage of German exports to Iran. But journalist John Rosenthal, who has written extensively on Germany for the World Politics Review Web publication, questions the accuracy of the statistics provided by the German Federal Trade Agency asserting that the exports declined by 15 percent to roughly €3.5 billion for the first 10 months of 2007. The "figures are said to be based on statistical data running only through October. This makes the claim for a 15% percent drop in exports appear highly dubious... If the reported volume of German exports for the first 10 months of 2007 is extrapolated over a full year, the resulting figure (€4.2b.) would in fact represent an increase of Germany exports as compared to 2006," Rosenthal wrote. Iran is the hot-button issue of German foreign policy, and the open secret that Germany is supporting the Iranian economy is presenting a host of problems for Olmert. Just last week, German energy company RWE announced it had become the sixth partner in the Nabucco consortium. Nabucco is a pipeline project that will transfer gas from the Caspian region to Europe. Austrian oil giant OMV is the principal partner in Nabucco and has negotiated a €22b. deal with the Islamic Republic, the largest oil and gas deal in the history of the European Union. RWE spokeswoman Annett Urbaczka told The Jerusalem Post that RWE has "no current contracts or discussions with Iran." She added that because of the political situation it was preferable not to receive gas from Iran, and that she was not aware of the OMV deal with Iran. When asked if she viewed the investment of almost €1b. from RWE to build a pipeline that will permit Iranian gas to flow to Europe as contradictory to her statement, she acknowledged that she understands the point. The open question is, will German and European oil and energy deals, made at the expense of Israel's security, top the agenda at the joint German-Israeli cabinet meeting set for next month?•