Iran Purge Causes German Exports to Dry Up

Louis Charbonneau, Reuters:

German exports to Iran will fall sharply this year as a sweeping purge of officials at Iranian ministries and state companies is causing contracts with German firms to dry up, a leading industry group said on Wednesday.

Germany is the top exporter of goods to Iran. In 2004, German companies exported goods worth 3.6 billion euros ($4.43 billion) and an estimated 4 billion euros in 2005, according to the German Chamber of Industry and Trade (DIHK).

"For 2006, we expect a significant decline of exports," Jochen Clausnitzer, head of the DIHK's Near and Middle East Department, told Reuters. READ MORE

Since he took office in August last year, Iran's hardline President Mahmoud Ahmadinejad has taken a defiant stance against the West, calling for Israel to be "wiped off the map" and he has vowed to forge ahead with Iran's nuclear fuel programme.

Ahmadinejad has also purged high-level officials in companies and ministries, Clausnitzer said.

"As a result, there will be very few orders won (by German companies)," Clausnitzer said, adding that the DIHK was lobbying the German government to pursue every possible negotiated solution to the standoff over Tehran's nuclear programme.

The West accuses Iran of developing nuclear weapons under cover of a civilian energy programme, a charge Iran vehemently denies. Western countries are now considering taking steps against Iran that could eventually lead to U.N. sanctions.

"Given the current political situation, this business will be less and less interesting for German companies in the medium and long term," he said.

In 2004, Germany accounted for 12.8 percent of Iranian imports, followed by France with 8.3 percent and Italy with 7.7 percent. Other important exporters of goods to Iran include China, United Arab Emirates, South Korea and Russia.

DIHK: SANCTIONS INEFFECTIVE

Germany, along with France and Britain, has been spearheading a European Union effort to persuade Iran to give up its uranium enrichment programme in exchange for economic and political incentives.

But Iran has repeatedly rejected the offer, saying it will never give up its right to produce enriched-uranium fuel. Although Tehran says it only wants low-grade fuel for energy, the EU and United States believe Iran wants to make highly enriched fuel for atomic weapons.

Now the "EU3" have joined Washington in demanding that the Vienna-based International Atomic Energy Agency (IAEA) refer Iran's case to the U.N. Security Council, which could impose economic sanctions, when the IAEA board meets next week.

Clausnitzer said the DIHK had told the German government that sanctions would not be effective and that only a negotiated solution would solve the problem.

"The DIHK fears that U.N. sanctions would result in binding the Iranian people and the Iranian government together, which is a dubious political goal," he said.

"The case of Iraq showed that sanctions are ineffective. We have explained this to the German government. We have also informed our contacts in Iran of our concerns about developments there and will continue to do so," Clausnitzer said. ($1=.8131 Euro)