Friday, September 22, 2006

Iran Pays Off China, Russia, France and Germany

News Max:
There's a strong economic incentive behind the U.N. Security Council and Germany's opposition to American calls for sanctions on Iran over its nuclear program - billions of dollars in trade. READ MORE

The United States has little to lose if sanctions are imposed. America imports only about $100 million of goods from Iran, mostly rugs, nuts and juice, while exporting about $55 million in cigarettes, pharmaceuticals, and wood pulp.

But total trade between Iran and permanent Security Council members Russia, China, and France, plus Germany, is expected to top $22 billion this year, up from $18 billion last year, The Wall Street Journal reports.

China's exports to Iran are up 25 percent this year. Chinese companies sold nearly $400 million worth of air conditioners and other machinery in the first six months of 2006, plus $300 million in trucks and other vehicles.

In addition, China gets around 18 percent of its crude oil from Iran'- $15 billion worth- and dozens of Chinese companies are engaged in construction work in Iran.

Germany is Iran's largest supplier of foreign goods, with $5.4 billion in exports last year. Iran buys German steel, and automaker DaimlerChrysler is planning a Mercedes-Benz plant in Iran.

Germany's chamber of commerce claims that severe economic sanctions on Iran could cost Germany 10,000 jobs.

France exported $2.33 billion in goods last year. This month a Tehran vehicle manufacturer announced that it will begin selling to Russia cars that it builds in Iran in cooperation with France's PSA Peugeot-Citroen, according to the Journal.

Russia is building Iran's first nuclear power plant, a $1 billion project, and has agreed to a $700 million deal to sell air-defense missile systems to Iran.

The Journal reports that these commercial ties, along with Iran's position as holder of the second-largest oil reserves, "put a built-in limit on how far industrial powers will go."

And a senior U.S. official concedes: "Anything that really restricts trade will be hard, if not impossible, to get."

But Nicholas Burns, the State Department's undersecretary for political affairs, maintains that American allies "understand that sanctions may very well be necessary to counter Iran's drive for a nuclear weapons capability."