July 28, 2010 | Quote

German Firms Continue Trading with Iran Despite Sanctions Policy

Berlin – Business between German firms and Iran is pretty good and goes on largely unimpressed by demands made by Chancellor Angela Merkel (Christian Democratic Union) and Anton Boerner, President of the Federation of German Wholesale and Foreign Trade, for stricter sanctions. This is the result of a survey that Die Welt conducted among major German corporations. The overall figures for the previous year also fail to reflect a change in attitude among German companies.

While German exports went down 18.4 per cent on average in 2009, the figure for trade with Iran was down just 5.3 per cent. “We need massive sanctions,” federation president Boerner said recently. The German economy would easily get over that because the overall volume was low.

In 2009 alone, Germany delivered goods worth more than 3.3 billion euros to Iran. The main sectors trading with the country are mechanical engineering, vehicle construction, chemical products, gas, and oil. Germany continued to be Iran's most important trading partner. Critics are incensed and refer to the incompatibility of lively business relations with the critical stance of the Federal Government on Iran in connection with the country's nuclear policy. Apart from that, the German Government also regards the security of the state of Israel as a key element of Germany's policy to which the Arab country posed a major threat.

As a result, some corporations have taken the necessary action. Bayerngas, for example, shelved the development of a major natural-gas filling station network, which was to have 100 filling stations to service 100,000 cars. Bayerngas spokesman Dirk Barz said with reference to the political situation in Iran that it was “impossible to disregard the framework conditions.”

Siemens had announced at its annual general meeting in January that business with Iran would be terminated in June this year. In the insurance sector, Allianz and Munich Re decided to withdraw from Iran. A spokesman of Munich Re announced that the insurance arrangements for infrastructure and ships would expire in March 2010. The share of those in the overall business volume of the corporation is anyway small. Insurance cover arranged with Tehran amounts to 10 million euros. Given a group turnover of 140 billion euros, this is hardly noticeable at the end of the day.

Linde, manufacturer of technical gases doing business with Iran in the liquefied petroleum gas sector, is still undecided. A spokesman said that it had “not yet been resolved” whether Linde would continue to deliver equipment to Iran. However, “relevant new business” had not been concluded. Turnover in 2009 was 36 million euros compared to 91 million euros in 2008. The company would follow the example set by Siemens and refrain from concluding new agreements.

Other corporations continue to be active in Iran despite all criticism. Vehicle manufacturer MAN responded to a relevant query that there were “no plans to change anything.” MAN delivers trucks, buses, diesel engines, and turbo-generators for the oil industry. Security in the region was none of the corporation's business, a spokesman said. ThyssenKrupp announced that the corporation had “responded to the proposal made by German policymakers and largely suspended business with Iran with the exception of services and spare parts. To the extent that business is done with Iran, all relevant licensing obligations and delivery bans are stringently observed.” Nevertheless, at its annual general meeting in January, the corporation had trouble with the non-governmental organization Stop the Bomb which had bought shares and demanded to boycott trade with Iran. In 2008 and 2009, ThyssenKrupp's turnover with Iran amounted to approximately 185 million euros.

Daimler-Benz and BASF are still undecided. A Daimler spokesman announced that Daimler “has been cooperating with licensee Iran Khodro since the 1960s.” The group was involved in the production of buses and trucks. The volume of its Iran business was below 0.1 per cent of overall turnover in 2009.

Chemicals groups BASF also remains active in Iran. It announced that it had good and long-term business relations with Iran. In 2009, turnover was “several dozen million euros.”