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"The outrageous situation in which Germany is the most problematic among the major European countries with respect to the Iranian nuclear challenge is a badge of shame in terms of Germany's willingness to fulfill practically its great promise vis-a-vis the Jewish people," Yossi Levy complained recently in an unusually harsh telegram to the Foreign Ministry in Jerusalem. Levy, Israel's former consul in Berlin, is currently the political attache in Warsaw.

Under the title "Has the Loyal Friend Disappointed?" Levy wrote: "Iran denies the Holocaust, hosts flagrantly anti-Semitic conferences and its leaders utter profanities which, if blurted out by a drunk in a railway station in Frankfurt, would land him in jail ... Germany is not permitted to stand on the sidelines. Certainly not for the sake of lucre."

Levy calls on Israel to demand that Berlin make good on its promise of "special relations," adding, "if the memory of the Holocaust is the pillar of German faith after the war; if principles have meaning in the relations between the peoples; and if Germany is indeed a guarantor of Israel's security ... then the day of reckoning has come."

What has happened to "Israel's best friend in Europe"? And to the country that was profoundly shaken by Iraqi Scuds falling on Tel Aviv in 1991, and hurriedly dispatched its foreign minister to Israel, equipped with Patriot missiles and promises to supply submarines?

In an exclusive interview with Haaretz, Germany's current foreign minister, Frank-Walter Steinmeier, who was in Israel as part of a Mideast tour this past week, rejects the thesis that says his country is "the weak link in the West's struggle against Iranian nuclearization." He begins by attacking Iran's president, Mahmoud Ahmadinejad, saying: "The hateful statements of the president against the State of Israel and his denial of the Holocaust are completely unacceptable and revolting. The German government has made that crystal clear and we have told the Iranians so time and again." He is skeptical about Tehran's claims that its nuclear program is designed for peaceful purposes only, and promises that his government "is taking this conflict very seriously," adding that, "it has the potential of disrupting what little regional stability is left in the Middle East."

Nonetheless, unlike his French counterpart, Bernard Kouchner, Steinmeier, who spoke with Haaretz in Tel Aviv, is not willing to talk about a military option. "It is my firm belief that we must solve it peacefully," he says. "Everything else would mean playing with fire. Our priority has therefore been to build as strong an international coalition as possible. And we have succeeded in getting key players, such as the United States, Russia, China and Europe, to agree on a common approach that would impose sanctions on Iran for failing to comply with the demands of the international community, while, at the same time, trying to find a political solution for the problem."

Visiting Israel as part of a regional tour that includes Egypt, the Palestinian territories and Turkey, the minister adds that if it becomes apparent during the coming month that the International Atomic Energy Agency is unsuccessful in clarifying the nature and scope of the Iranian nuclear program, the UN Security Council will formulate another declaration - its third - in which sanctions against Iran will be broadened.

Germany is one of Iran's largest trade partners. At least 1,700 German companies are operating in Iran, including Mercedes-Benz, Volkswagen, Krupp, Siemens and the BASF chemical company. These companies signed deals with Iran in 2006 totaling $5.7 billion. In September, the German Ministry of Finance organized a conference on "market opportunities" in Iran; the Chamber of Industry and Commerce did the same in October. The former president of the Iranian-German Chamber of Commerce in Tehran recently stated that "two-thirds of Iranian industry is based on German engineering products."

Steinmeier denies that Germany's policy toward Iran is driven by commercial considerations: Indeed, he notes that he was the first European politician to mention the need to impose sanctions against Iran (in an interview with Der Spiegel in 2006). He adds that Germany has reduced the scope of guarantees it provides to its exporters to Iran, leading to a 17-percent reduction in exports during the past six months. (Iran accounts for only about 0.5 percent of Germany's annual exports, which total $1.133 trillion.) Finally, he says, Germany's loyalty to Israel has always been untarnished, and this is certainly true with respect to the question of the Iranian nuclear program.

Furthermore, Steinmeier does not accept the claim that Germany's policy is related to its economy's dependence on Iranian oil. "Energy supplies have certainly become a serious factor in international and security policy," he explains. "We have systematically followed a policy of diversification - both regarding suppliers and energy sources. Today, Germany receives energy from a number of countries ... Our interest in Iranian oil, by the way, is minimal. And we have a balanced energy mix, made up of oil, gas and renewable energy."

Steinmeier owes his career to the previous chancellor, Gerhard Schroeder, whom he accompanied for nearly 15 years. Steinmeier most recently served as director general of the prime minister's office and was considered his confidant. "Schroeder's silent star," the weekly Die Woche called him at the time, due to the low profile he carefully maintained.

Tireless workaholic

Steinmeier, 51, a lawyer by training, is the first foreign minister from the Social Democratic Party since Willy Brandt, who served from 1966 to 1969. He is considered a professional and tireless workaholic with a talent for defusing crises, which observers attribute to his "discrete charisma."

Since entering the large shoes of Joschka Fischer two years ago, he has evolved from an invisible politician into the most popular figure in his party, which belongs to the "grand coalition" headed by Angela Merkel. There are those in the party who have already marked him as the next chancellor.

As Schroeder's bureau chief, he was responsible for managing numerous issues - including economic reform, the response to the 9/11 attacks in the U.S., and the policy against launching war on Iraq. Steinmeier also closely accompanied the formation of the anti-war axis of Berlin-Moscow-Paris.

Asked about President Putin's aggressive behavior in the international arena in general, and about the Iranian issue in particular, he seems like someone seeking to defend an old friend: "We have all noticed a new Russian assertiveness on the international scene. But I do not share the negative interpretation you often find in the press. Russia has undergone a fundamental process of transformation during recent decades and has thus been long absent from the international scene. If Russia returns now, we should welcome it as an important and influential player and strategic partner. Of course, this also requires a readiness on Russia's part to take over international responsibility. But we need Russia when trying to solve any of the most pressing international crises - just consider Kosovo, the Middle East, Iran and so on."

As for Iran, Steinmeier says: "The Russian position is far more nuanced than you suggest. For Russia, as for us, an Iranian nuclear bomb would constitute a severe risk to international security." He notes that even if the major powers have different interests and approaches, and they analyze the situation differently, the "Group of Six" (the U.S., Russia, China, Great Britain, France and Germany) has remained united, adopting a common stance toward Iran. "President Putin knows how important this unity is and I don't believe the Iranians have any illusions as to where Russia stands."

The results of the last elections in Germany, in September 2005, and the composition of the Conservative-Socialist unity government, have yielded conflicting assessments about the future of Germany?s relations with Israel. According to Dr. Wolfgang Stock, former political correspondent of Frankfurter Allgemeine and author of the first biography of Merkel: "After Schroeder, a chancellor whose fondness for Israel was not great, to put it mildly, a refreshing change is expected."

"Disappointment," "frustration" and "concern" are the feelings with which Israel's outgoing ambassador, Shimon Stein, left Berlin about a month ago. In an interview with Yedioth Ahronoth, Stein noted a rise in anti-Semitism, nonrecognition of Israel's right to exist, and the frequent comparisons between IDF actions and those of the Nazis.

Israel's Foreign Ministry tries to qualify the ambassador's words. "Since the change in government in Germany, relations have not deteriorated and have even grown closer, and at all levels - political, security, economic and cultural," a source says.

The two countries have recently launched the Future Forum foundation, with a German investment of 24 million euros, which aims to strengthen bilateral connections in all areas of civic society. The ministry in Jerusalem also notes "the excellent chemistry between Prime Minister Olmert and Merkel," and "intensive German activity on behalf of the captives in Lebanon."

Steinmeier: "Of course, every single case of anti-Semitism and racism in Germany is one too many, and as a society we need to fight these tendencies wherever we find them. However, I do not believe that Germany is facing an increase in anti-Semitism. Nor is it in any way a common phenomenon for Germans to deny Israel's right to exist or to compare IDF actions to the practices of the Third Reich. It would be wrong to reduce German society to these phenomena, as serious and disturbing as they are."

Steinmeier is eager to talk about the upcoming Annapolis conference, which he sees as an important key to a better future. He refuses to join those who predict that the conference will fail and fear that violence will ensue in its wake. On the contrary: He says the decision to convene the conference has already generated the dynamics necessary for the positive progress seen in recent months: "For the first time in seven years, there is a realistic perspective for negotiations. Israelis and Palestinians are meeting regularly on the highest level and have begun to address core issues. Both sides show a serious desire to make progress - my talks during these past two days have confirmed this impression."

Steinmeier praises the "constructive stance" the Arab League has taken toward the talks and notes that "U.S. engagement is far more serious now than at any time during the past couple of years." He says he believes the Americans will not be deterred this time from exerting pressure on the sides, and advises Israel to refrain from unilateral measures - "namely, any new settlement activity" - that could torpedo the current momentum. "These developments are crucial, and we should not diminish them, but seize this opportunity."

Steinmeier, who would like to be a bearer of good tidings, stresses the "European Action Plan" he recently proposed for the Middle East. The idea is to convene the 27 members of the European Union prior to the Annapolis conference and define how each can advance the prospects for peace. He mentions, for example, the need to strengthen the Palestinian economy, investments in education, establishment of democratic institutions, and helping to reform the Palestinian security sector.

Can all this work without the participation of Hamas?

The EU's position toward Hamas has always been to "measure them by their deeds," Steinmeier says. "But as long as Hamas does not even recognize Israel's right to exist, as long as it does not renounce violence, and as long as it acts like a terrorist organization rather than a political party and does not stop firing rockets into Israeli territory - there is simply no basis for cooperation. Hamas has so far failed to prove that it can change and become a responsible political actor."

Cutting off electricity? Reducing the supply of fuel to Gaza? Steinmeier ignores this. He attributes the responsibility for the increased suffering of Gaza residents to one factor alone: Hamas.

Nativ should be transparent

With the collapse of the Soviet Union, Germany found itself in a bind: On one hand, Israel demanded that it block entry to Soviet Jews, arguing that Germany had no moral right to absorb them and trying to compel them to immigrate to Israel.

On the other hand, Germany's Jews demanded that the country open its gates so that their community could grow and renew itself. German democracy, which found itself in an impossible situation, decided to reject the demand of the Jewish state in favor of the needs of the local community.

Today, when that community numbers over 200,000, according to some assessments, the argument arises again: Israel plans to use its Nativ liaison bureau ?(not yet established but planned to be operating in Germany?) to exert pressure on Jews of Russian background, who now hold German citizenship, to immigrate to Israel.

This decision has generated considerable anger among leaders of the Jewish community. Steinmeier does not want to get involved: "Whether somebody prefers to live in Germany or Israel is a decision only he or she can make," he says.

However, he calls for "full transparency" of Nativ's activity and for the Israeli government to cooperate closely with the Central Council of Jews in Germany.

"The memory of the Shoah is deeply ingrained in the history of my country, and Germany will always stand by the Jewish people and by Israel," the minister adds emotionally.

"The fact that Jewish life has returned to Germany − after we did everything to extinguish the Jewish people through mass murder and genocide − is an incredibly important development for my country. We are grateful that the Jewish community is thriving and growing again in Germany."