Strong Germany-Iran Economic Ties Trouble Activists

By Toby Axelrod (JTA)

Published May 05, 2009.
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Shareholder meetings usually are about profits.

But at the scheduled May 15 meeting in Munich of Linde AG, a chemical company, a group of activists is expected to take the floor with a simple message: Don’t do business with Iran.

The activists, from the German and Austrian group Stop the Bomb, say corporations along with considering profits should be responsible when it comes to nuclear threats.

“There is a big gap of politicians talking here and the things that Germany is actually doing,” said Michael Spaney, a co-founder of Stop the Bomb.

“Two-thirds of Iranian industry is dependent on German technology,” he said. “We are trying to inform the public that Germany is a supporter of the Iranian regime in this economic respect, and the policy of German sanctions is one of omissions, shortfalls and failures.”

While talk of sanctions against Iran intensifies in Berlin, and the list of banned items that Germans cannot sell to Iran grows, German exports to Iran are rising. Last year they totaled $5.1 billion, up 8.9 percent from 2007.

On paper, German Chancellor Angela Merkel and Foreign Minister Frank-Walter Steinmeier appear more unified than ever against Iran.

Going beyond the requirements of the law, the German government is trying to raise moral pressure on German companies through meetings with business leaders and personal letters, according to Felix Probst, a spokesman for the German Economic Ministry.

Few in Germany openly champion Iran ties, and only a handful of politicians here advocate reducing sanctions. But at the same time, local German chambers of commerce persist in coaching firms on how to do business with the Islamic Republic. The next such meeting will take place this month in Potsdam.

Advocacy groups, many of them led by pro-Israel non-Jews, rail against such activity. Last summer, demonstrators in Siegen protested a $156 million deal between Iran and SPG, a German gas and oil company. Though the protest raised public pressure – by some accounts, it helped prompt Merkel to adopt a policy of discouraging legal business with Iran – the SPG deal was not derailed.

Most recently, Stop the Bomb protested at the Siemens shareholders’ meeting in January. Since 2007, the group’s branch in Austria has protested the Vienna-based Oil Management Company’s massive deals with Iran.

Even among those who support further isolating Iran, however, many prefer behind-the-scenes diplomacy to public protests.

“There is a time to throw stones and a time to collect them,” said Sergey Lagodinsky, a spokesman for the Working Group of Jewish Social Democrats, which is part of Germany’s Social Democratic Party.

“There are situations when increasing the heat and making public debate are important,” he said. But to promote change, “you have to have a certain trust and credibility, and this you cannot do by threatening and scandalizing.”

Behind-the-scenes work already has yielded important results, Lagodinsky said, such as the foreign minister’s decision to support tougher sanctions against Iran.

Advocates would like to see Germany outlaw all credit guarantees that support business with Iran. The guarantees, which enable German companies to get insurance for goods sold to Iran, have dropped precipitously since 2004, but they are still legal. Experts say outlawing such guarantees abruptly might give Iranian customers an excuse to stop repayments of outstanding bills for goods bought from German companies.

German guarantees for exports to Iran already have become remarkably restrictive, according to the German Economic Ministry. They are only available now for exports worth less than 1 million euro (about $1.3 million) that are paid for in cash. The volume of export credits for new business between Germany and Iran also has dropped dramatically, according to the ministry.

“We just don’t issue too many of these guarantees anymore,” said the Economic Ministry’s Probst. “But of course if someone applies, he has to be treated fairly.”

A spokesman for the German Foreign Ministry who asked not to be identified by name told JTA, “We also want to prevent Iran from going on the nuclear adventure. Of course, maybe people may feel we are moving too slowly, or that we are too diplomatic, but that is our work.”

Alexander Ritzmann, a senior research fellow at the Brussels-based European Foundation for Democracy, says the government at least is moving in the right direction.

“Trying to establish sanctions that work is generally the right thing to do, but of course more has to be done,” he told JTA. “That is obvious, especially if we talk about the German business world, which is very ignorant about the threat. They just say, ‘If we don’t sell our stuff, China is going to sell their stuff.’”

The idea, Ritzmann said, is to “increase the costs of doing business with Iran. They calculate costs. You cannot approach the business world with morals. Well, you can try, but it does not work.”

Advocates like Spaney, however, are sticking to their moral arguments.

At the Linde shareholder’s meeting, Spaney said he may ask a question he says no one else would dare pose: “How can a German company morally justify doing business with a regime that denies the Holocaust and repeatedly threatens to wipe Israel off the map?”

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