German Conglomerate Siemens to Cut Future Trade Ties With Iran

Pullout is limited victory for campaigners in Germany, where energy giant E.On is still pursuing Iran investments.

German engineering conglomerate Siemens announced Tuesday that it would cut all future trade ties with Iran, although the company intends to maintain existing contracts.

Germany, one of six countries seeking to persuade Iran to suspend its atomic work, is one of the biggest exporters to Iran despite three rounds of modest United Nations sanctions prompted by past Iranian evasions of nuclear monitoring.

Western nations suspect the Islamic Republic of trying to develop nuclear weapons capability, which Tehran denies. It says that its uranium enrichment program is designed solely for electricity generation, not atomic bombs.

iemens trade with Iran has come under fire from Israel, despite the fact that Israeli government companies continue to provide contracts for airports and paving roads to the German company.

The company has also been under pressure from Jewish and other organizations, including a German group called group Stop the Bomb, which is working to stop Iran's nuclear program.

But while campaigners may view Siemens' decision as a victory, other German business may not follow suit and some are still actively pursuing investment in Iran.

"In the interest of security of supply for Germany and Europe we are in talks with many producers of natural gas, amongst others Iran," a spokesman E.ON, a German-owned international energy supplier, said.

Siemens, which is Europe's biggest engineering conglomerate, was aware of the sensitivities attached to doing business in Iran, Chief Executive Peter Loescher said.

"Some time ago, we reduced our business activities with customers in Iran," he said, responding to questions at a shareholders meeting.

Loescher said there were still bids submitted by Siemens before October 2009. If they were not accepted, it would mean new business in Iran would end by mid-2010.

Siemens, which makes high-tech machinery as well as domestic appliances, generates an annual 500 million euros ($704.5 million) in sales from Iran, which last year represented 0.7 percent of the firm's overall sales.

Loescher said Siemens' trade with Iran was exclusively civilian.

In 1974, Siemens and French scientists started building Iran's first two civilian nuclear power reactors at Bushehr. The plants were close to completion when Iran's Shah was toppled in the 1979 Islamic Revolution, prompting Siemens to pull out and halting the undertaking for many years.

The Bushehr project was subsequently revived with Russian help and, after many delays, one reactor is due to be launched later this year.

Meanwhile, on Monday, after heavy diplomatic pressures from Israel government, a German construction company also canceled its end of a contract to renovate the Bander Abbas Port in Iran.

Israel's ambassador to Berlin told Chancellor Angela Merkel's top aides, as well as foreign ministry officials, that Iran has been exporting weapons from that port bound for Hezbollah in Lebanon and Hamas in the Gaza Strip.

Ambassador Yoram Ben Ze'ev stressed that the Gaza-bound weapons ship "Francop," which was recently apprehended by the Israel Defense Forces in the Mediterranean, had been dispatched from that Iranian port.

A political official said that the Israeli embassy received word more than a week ago of a deal in the works between the Hamburg Company, which is partly owned by the German government, and the Iranian agencies.

At Israel's request, German officials contacted the company owners and hinted that ir preferred the deal be terminated. Several days later, the company announced that it would withdraw from the contract.