In Spite of German Talk, Trade With Iran Growing

In first 4 months of year, German exports to Iran up by around 18 percent from same period last year.

Trade between Germany and Iran is expanding despite Berlin's declarations that it is curtailing its economic activity with the Islamic republic. Haaretz has calculated that in the first four months of the year, German exports to Iran increased by around 18 percent from the same period last year.

If this trend continues, German exports to Iran could match the record of 2005-2006, when German companies sold Iran goods worth more than 4 billion euros.

Germany, Iran's biggest trade partner in the European Union, is under American and Israeli pressure to reduce its economic ties with Iran, after Tehran's refusal to suspend uranium enrichment and its threats against Israel. This comes on top of sanctions discussed by the UN and EU.

"Perhaps you have an economic interest," Prime Minister Ehud Olmert told the German people in a German television interview 18 months ago. "But you have a deeper moral obligation to yourselves and your history."

German politicians and officials over the past year have cited the reduction of overall trade with Iran in 2007 - by some 16 percent in the first half of the year - as proof that Berlin is willing to damage its economic relations with Iran for the sake of Israel's security.

German Chancellor Angela Merkel said on her visit to Israel in March that Germany's trade with Iran has fallen significantly in recent years.

However, German government figures show that after the 2007 decline, trade between the two countries is growing again.

In the first four months of 2008, Germany exported to Iran 1.35 billion euros worth of merchandise, consisting of increased amounts of chemical and iron products, cars, engines and engineering equipment.

Some 1,700 German companies are operating in Iran, including giants such as Siemens and chemical group BASF.

German economists told Haaretz that German politicians should not have cited the trade decline of 2007 to prove that Germany was doing more than the sanctions require, just as this year's trade growth cannot be cited to show that Germany is doing nothing to pressure Tehran.

"The decline of German exports to Iran in 2007 was most likely based on inner-Iranian trouble. After he won the elections, President Ahmadinejad replaced many decision makers in the administration and industry, stopped or suspended running projects and new projects. This caused uncertainty also to the private Iranian sector," said Klaus Friedrich of Germany's VDMA engineering association.

"As a result, the VDMA recognized a strong decline in Iranian orders, from autumn 2005 to the end of 2006 ... [Since] the beginning of 2007 the situation in Iran seems to have stabilized on a lower level than the previous years .... Therefore it is not really surprising that German exports to Iran are stabilizing in 2008," he said.