Suspension of Germany's economic cooperation with Iran unbeneficial for Berlin

Statement by Michael Bauer

09.05.2009 · Trend News (Azerbaijan) / D. Ibrahimova

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The German government can not completely prevent German companies from cooperating with Iran and will not do so because it can harm Berlin itself.

"The German government cannot simply prohibit trade in general," Michael Bauer, German expert on Iran, told Trend News. 

German government increases the pressure on companies to stop their business cooperation with Iran, and even attempted to obstruct holding business conference with the participation of Oil Minister of the Islamic Republic, Handelsblatt daily reported. 

Last week, the Government of Chancellor Angela Merkel called on the German Near and Middle East Association NUMOV to cancel two conferences on Iran, Handelsblatt reported.

"These events are clearly contrary to the state policy and can bring great harms to the foreign policy of Germany," said the message of the Ministry of Economy of Germany. 

Despite the confrontation with Iran over its nuclear program, Germany is one of the main economic partners of Iran. The amount of trade between Iran and Germany from 2007 to 2008 grew 10.5 percent. Recent data show that Berlin has considerably reduced the amount of loan guarantees provided to German companies cooperating with Iran, but even last year, German export grew, Reuters reported.

According to experts, German government's ability to influence the German companies is limited.

"The German government has only limited authority to prevent private companies from engaging in trade with third countries," Bauer, fellow of Centre for Applied Policy Research, told Trend News via e-mail. 

The government cannot simply prohibit trade in general, but needs to make a clear legal case, e.g. it can prohibit trade with goods that are included in UN Security Council sanctions, he said.

Germany is one of the Western countries that are members of the "six" of the UN Security Council, which adopted three series of economic sanctions with regards to Iran. The goal of the economic sanctions was to suspend development of Iran's nuclear program. Some European countries and the United States fear that Iran can create nuclear weapons, while Tehran insists on the peaceful nature of the development program. 

Iran also considers that the economic relations between Tehran and Berlin will not be broken, because it is unprofitable for Germany itself.

"Relations between Iran and Germany are long and stable, and therefore, it will be very difficult for German government to break the existing relations, which can inflict damage to the German companies cooperating with Iran," Ali Mazrui told Trend News in a telephone conversation from Tehran. 

European countries, in particular Germany, the annual gas consumption of which is 100 billion cubic meters, are interested in the supply of Iranian gas to Europe. For the gas reserves, Iran ranks the second in the world, and officials of the country have repeatedly said the country plans to establish supplies to Europe.

"Iran could become a safe and reliable energy supplier for Germany," Iranian Oil Minister Gholamhossein Nozari said in an interview with Handelsblatt daily. 

On the other hand, Germany does not want a complete break of relations with Iran, because it takes into account the possibility of improvement between Iran and the West, Mazrui said. "I think for this reason, Germany aims to observe a balance in relations with Tehran," said the expert.

Since the election of President Barack Obama, who said the possibility of negotiating with Iran without preconditions, it was increasingly talked about the possibility of improvement of relations between Tehran and Western countries.

The reason, for which the German companies do not refuse to cooperate with Iran irrespective of the pressure from the government, can be the financial crisis.

"My understanding is that especially with the current recession, the businessmen argue they need all the business they can get," American expert on Iran Robert Freedman, fellow of Johns Hopkins University, told Trend News via e-mail. 

With regards to the impact of the suspension of German cooperation with Iranian companies, if that happens, it will have a temporary effect.

"The impact of such measures is limited anyway: If a German company cancels its business with Iran, a Chinese or Russian company is ready to replace it," Bauer said. 

T.Jafarov, E.Tariverdiyeva contributed to the article.

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