Germany’s Economic Ties To Iran

German engineer Heinz Mebus made contact with Iran through A.Q. Khan in 1987, before he worked on the Pakistani nuclear weapon program.

In 2006, Germany was Iran’s biggest trade partner with 4.1 billion euro turnaround. The following German companies continue to trade with Iran: Dillinger Stahl, Heidelberg Zement, Krupp, Siemens, Linde, Lurgi, Lufthansa, Mercedes and Volkswagen.

Germany opposes stricter embargoes against Iran proposed by France (Der Spiegel, September 22).

German Chancellor Angela Merkel said in February 2006, “We must take the Iranian president’s rhetoric seriously.” Similarly, Germany’s Minister of Foreign Affairs Dr. Frank-Walter Steinmeier has more than once declared his support for diplomatic and economic sanctions against Iran.

Nevertheless, German companies have continued to invest billions of Euros in Iran over the past decade, and the German government supports those investments through public subsidies.

Germany is Iran’s number one trading partner, providing vital investments for Iran’s economy.

“Some two-thirds of Iranian industry relies on German engineering products,” said Michael Tockuss, former president of the German-Iranian Chamber of Commerce in Tehran. “The Iranians are certainly dependent on German spare parts and suppliers.”

In 2005, export guarantees were reduced by more than 36.8 percent to around 1.4 billion Euro. The German government’s compensation for the risk of trade with Iran was 5.8 billion Euro.

The German Engineering Federation stressed how its business with Iran has grown: “In the year 2005, the German machine construction made exports to Iran worth 1.5 billion; in 2006, the business was even more lucrative.”

Five thousand German companies do business with Iran, a third of which have a representative in Iran. Of these companies 1,750 are registered as members of the German-Iranian Chamber of Commerce.

Many firms want to do business in Iran, albeit increasingly in secret to avoid public awareness of their partnership with the regime. They include giants such as BASF, Henkel, Continental, Bahlsen, Krupp, Linde, Lurgi, Siemens, ZF Friedrichshafen, Mercedes, Volkswagen, MAN, Hansa, Hoechst, and smaller firms such as Stahlbau Schauenberg, Schernier, and Wolf Thermo-Module.

“German companies are trying now, as much as possible, not to publish their contracts with Tehran,” the German business paper Handelsblatt wrote in January 2007. “Everything that could affect the U.S. market is deadly. Siemens for example, did not comment officially on its locomotives deal.”

On July 29, Deutsche Bank announced that in the future it is not going to keep accounts in Iran. In doing so, it will be following the footsteps of Commerzbank and UBS.

On August 21, Dresdner Bank has said it plans to pull the plug entirely on “its activities with Iran and in Iran,” citing excessive “bureaucratic expenses.” The Financial Times Deutschland said Dresdner Bank’s 2006 lending in Iran amounted to the low end of the hundreds of millions of Euros and had fallen to double digits in 2007.

On November 14, 2006, Iran’s Power Plant Projects Management Company (Mapna) and Germany’s Siemens signed a deal worth 450 million ($570 million) to build 150 locomotives for the Iranian railway network, the official news agency IRNA reported. The deal envisages the import of 30 fully built locomotives to Iran in the first phase and construction of 120 more inside Iran over six years. The contract also requires Siemens to transfer the technical know-how to Iran in 10 years. Three years earlier, in August 2003, Siemens – a firm with expertise in nuclear power plant construction – signed a contract to deliver 24 power plants. To complete the deal, Siemens had to commit itself to “technology transfer with regard to small and medium-sized power stations.”

BASF Iran has been active since 1959 and represents the entire BASF portfolio, with a special emphasis on strongly growing industries like automotive, petrochemicals (catalysts) and fiber. BASF Iran had a turnover of around 70 million in 2005.