March 31, 2011 | Jerusalem Post

German Gov’t, Iranian Bank EIH Circumvent Sanctions’

BERLIN – New disclosures earlier this week have catapulted the scandal-plagued Hamburg-based Europäisch- Iranische Handelsbank (EIH), the German Foreign Ministry and Germany's Central Bank (Deutsche Bundesbank) into a new controversy about Germany circumventing sanctions against Iran's nuclear and missile programs.

According to a front-page story in the main German business daily The Handelsblatt, “although President Mahmoud Ahmadinejad's country is subject to strict economic sanctions by the EU and USA, Germany helps in circumventing them.”

Handelsblatt wrote that the Foreign Ministry – run by the pro-business Free Democratic Party (FDP) – “rubber stamped” massive Iran oil transactions. The FDP is the party of German Foreign Minister Guido Westerwelle.

India's central bank informed Germany in February that it intends to conduct Iranian oil financial transaction worth 9 billion euros via the Bundesbank.

India has been transferring the funds in connection with its purchase of Iranian crude oil for several weeks to the Bundesbank, which serves as the international conduit for the EIH in Germany.

“Israel's position remains: The EIH should be shut down,” Yinam Cohen, a spokesman for Israel's Embassy in Berlin, told The Jerusalem Post on Wednesday.

According to the US Treasury department, the EIH, is “one of Iran's few remaining access points to the European financial system. EIH has facilitated a tremendous volume of transactions for Iranian banks previously [blacklisted] for proliferation.”

In addition to financing Iran's nuclear program, the Treasury Department asserts the EIH is also involved in Iran's missile program.

When asked whether the Bundesbank is financing Iran's nuclear program, Magnus Mäkelä, a spokesman for the Bundesbank, wrote the Post by e-mail on Thursday, “If an account holder asks the German Central Bank to make a payment that is permissible under these European Union regulations, the German Central Bank is required to carry out the transaction.”

Mäkelä declined to immediately answer Post's questions via telephone and email regarding whether the Federal Bank has a responsibility toward the security of Israel and the international community. He said the Central Bank's board of directors is reviewing the Post's questions about the Bank's Iran business and the deals endangering the security of Israel – as well as the Bank's ostensible refusal to honor the German government's security pledge toward the Jewish state because of the Holocaust.

The Central Bank is a state-owned financial institution, and Merkel has repeatedly said that Israel's security interests are “nonnegotiable” and integral to the Federal Republic's national security.

On Thursday The New York Times reported an Obama Treasury department official said, “Treasury is concerned about recent reports that the German government authorized the use of EIH as a conduit for India's oil payments to Iran. Treasury will continue to engage with both German and Indian authorities about this situation, and will continue to work with all our allies to isolate EIH.”

Critics argue that revenues from the Indian oil transactions can be used to finance Iran's nuclear program and its support for international terror – including its allies Hamas and Hezbollah. In February, a bi-partisan Senate letter – signed by 11 Senators, spanning Republicans and Democrats (and one Independent) – urged Westerwelle to take action against the EIH.

Andreas Peschke, a spokesman for Westerwelle, said Monday, “there is no legal basis to block its business activities.”

Asked about if the foreign minister had responded to the senators, a spokesman for the German Foreign Ministry wrote the Post, “In his response to the US Senators, Foreign Minister Westerwelle emphasized that the European-Iranian Trade Bank is strictly monitored by the German Bank supervision authorities, and the federal government actively pursues any evidence of activities relevant to proliferation relating to Iran. This is true of all businesses based in Germany, including the European-Iranian Trade Bank.”

He continued that “Germany shares the concerns of the international community, especially Israel, regarding the Iranian nuclear program.

A nuclear-armed Iran is unacceptable. Therefore, with our E3+3 partners, we have succeeded in further strengthening the UN and EU sanctions and continue to keep up heavy pressure on Iran. Iran must comply with Security Council requirements and cooperate with the IAEO in answering all open questions surrounding its nuclear program.”

A spokesman for Merkel wrote the Post by e-mail, and referred to a press statement in which Merkel's chief spokesman, Steffen Seibert, said the EIH is “strictly controlled.”

Germany has made no efforts to place the EIH on the EU Iran sanctions list.

During the negotiations last year, Germany resisted the inclusion of the EIH as a banned entity.

The German-Iranian trade volume last year amounted to 3.7b. euros, making Germany the third most important exporter to Iran, after UAE and China. Many German businesses, which are active in Iran, use the EIH to process financial transactions.

A report last week in The Hindustan Times, an Indian newspaper, alluded to possible closure of the EIH.

According to the paper, “The bank in Germany that is serving as the conduit for India's payments to Iran for oil imports from the latter country could face closure in a new round of sanctions against Iran. German National Security Advisor Christoph Heusgen, on a visit to New Delhi, said that 'If Iran does not accept the offers of the EU 3 + 3 and continues its nuclear programme, we favour more sanctions.'” The Hindustan Times report could not be verified.

Prime Minister Netanyahu will travel to Berlin in early April to meet Merkel.

Israel's Foreign Minister Avigdor Lieberman will also travel to Berlin and Munich in April.


Iran Sanctions