A gas deal between the large Bavarian energy company Bayerngas and the Islamic Republic of Iran could be a violation of Germany's trade regulations, the so-called "discouragement strategy," which urges companies not to trade with Iran, according to Felix Probst, a spokesman for the German Economic Ministry. Probst told The Jerusalem Post on Friday that he is "98% certain" that the ministry did not furnish Baynerngas with a permit to conduct a gas deal, because an application for trade with Iran was not submitted to the ministry. The spokesman added that at this stage he could not evaluate whether the contract with Teheran is "illegal or legal." Germany adheres to the UN and EU sanctions, but also propagates a nonbinding "discouragement strategy" for German firms who wish to trade with Iran, which calls on companies to avoid trade with Iran but entails no penalties or financial consequences. The "strategy" is viewed by critics as a paper tiger, noting that German-Iranian trade increased 10.5% in 2008. German manufactures frequently apply for a permit from the Economic Ministry to certify that their contract is not in violation of UN or EU Iran sanctions. Germany does not have unilateral legislation like the US that restricts investments in Iran. The American Iran Sanctions Act prohibits companies from investing more than $20 million annually in Iran. A management representative of National Iranian Gas Company (NIGC), Hassan Montazer, told the Iranian news organization Moj News Agency last Wednesday that Bayerngas plans to purchase Iranian gas. The Teheran-based Iran Oil Gas Network Web site confirmed that a "joint-venture agreement" had been signed between Bayerngas and NIGC. According to the Moj News Agency report, Bayerngas will provide Iran with compressed natural gas equipment and build gas refineries. Dirk Barz, the press spokesman for the Munich-based Bayerngas, denied to the Post on Friday that a "deal" between Bayerngas and Iran took place. Barz said, however, that Bayerngas had opened an office in Teheran with one employee to "concentrate on the natural gas" sector and "construction of the gas station network" in Iran. The Bayerngas-Iran project, according to Barz, involves the production of 100 gas stations and a transport system involving 100,000 gas vehicles. Responding to criticism of the German chapter of the political organization Stop the Bomb that Bayerngas is "undermining the international efforts" to halt Iran's nuclear weapon's program, Barz said "the goal is not to advance the bomb" in Iran or to "condone" Teheran's aim to attain a nuclear arsenal. He declined to cite the monetary value of the Bayerngas-NIGC trade agreement. Asked whether the trade agreement undercuts British and American efforts to clamp down on Iranian energy business activity to force the Iranian regime to halt its drive to build nuclear arms, Barz said the trade relationship between Bayerngas and Iran "should be a continuation of the new policy of detente" emanating from the Obama administration. US President Barack Obama has expressed a willingness to engage Iran diplomatically on suspending its nuclear enrichment program. "If it comes to a rapprochement between Iran and the US - which is to be desired - then one could enter into a business deal" with Iran, said Barz, adding that it is a "false interpretation" that Bayerngas is making Iranian President Mahmoud Ahmadinejad's denial of the Holocaust respectable by opening an office in Teheran. When questioned about Chancellor Angela Merkel's speech in the Knesset in March 2008, stating Germany has a special responsibility to protect Israel's security interests and isolate Iran, Barz said, "I see a responsibility to the Jewish state" and "can only underscore what Ms. Merkel said. We see the special responsibility as part of the company's historic obligation to Israel." Yet Barz cast doubt on criticism that Bayerngas is jeopardizing Israel's security and the company's responsibility to Israel because of the Holocaust. "How much is Israel's security endangered" by such business, he asked. Batz justified trade with Iran, citing that the German engineering firm Steiner Prematechnik Gastec was allowed to build three plants for converting natural gas to liquid fuel in Iran. The Steiner deal caused diplomatic tensions between Israel and Germany in the summer of 2008 after The Jerusalem Post exposed it, and that incident helped prompt the new "discouragement strategy." Israeli and American security experts have charged Germany with failing to take action against the booming German-Iranian trade. Germany conducted almost â‚¬4 billion in trade with Iran in 2008, making it Iran's largest European trade partner. "For years, international experts have pointed out the potential for pressure through targeted sanctions in the energy sector; even Economics Minister Karl-Theodor zu Guttenberg has repeatedly spoken of such sanctions," Jonathan Weckerle, a Stop the Bomb spokesman, told the Post. "But so far, apparently, both Guttenberg and other people in responsible positions in Germany lack the determination to enact such sanctions, even though they know their significance," he said. An Israeli Embassy spokesman told the Post on Saturday that, "We heard about this story for the first time and we will certainly follow any developments regarding this deal. The ambassador met some weeks ago with zu Guttenberg and raised our concerns regarding trade with Iran." According to an early April Tagesspiegel newspaper report, Guttenberg now favors a robust trade relationship with Iran. When asked about whether Guttenberg's Iran trade policy contradicts his earlier statements that sanctions should target Iran's gas and oil sectors, and his position that "without German political and economic pressure, Iran will hardly be prepared to make concessions regarding the nuclear question," Economic Ministry spokesman Felix Probst confirmed that there is a rift between Guttenberg and German Foreign Minister Frank-Walter Steinmeier on this matter. According to Probst, there "is dissent about the discouragement strategy" to convince German businesses not to commence deals with Iran. Probst said the source of the dispute between the two ministries is "the Foreign Ministry seeks that no business be carried out with Iran," and believes that when firms apply for permits to conduct business transactions with Iran, the applications should be placed on a back burner to delay increased commercial growth for Teheran. But Probst stressed that, strictly speaking, there is no legal basis to stop trade with Teheran, as the German parliament and the Merkel administration have steadfastly refused to enact legislation or unilateral sanctions to curtail or end such trade. Critics complain that Germany lacks the political will to fill its political rhetoric with meaning to defend Israel and the West against the Iranian nuclear threat.