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Berlin faces mounting criticism by German firms over Iran financial sanctions

By Saeid Najar Nobari

Berlin, April 26, IRNA - German companies have stepped up their criticism of the German government for backing UN financial sanctions against the Islamic Republic of Iran, saying their business interests have been severely affected by the controversial political move.

German business leaders argue that increasing financial pressure on Tehran is clearly the wrong way to proceed in the Iranian nuclear dispute.

"It is definitely wrong to further aggravate the situation," the executive director of Germany's VDMA industry association of plant and machinery makers, Hannes Hesse told the business daily Handelsblatt .

"What political sense does it make to generally block current letter of credits and (financial) transfers of the Sepah Bank and thus massively delay the payments to German firms?," Hesse asked rhetorically.

According to German companies, financial sanctions against Iran are in effect impeding the financing of purchases of imported goods by Iranian firms.

The blockade against Iranian banks have also caused delays in the payments to German companies.

The VDMA stressed earlier that sanctions should "not be always formulated by foreign policy guidelines".

German exports dropped six percent to 4.12 billion euros in 2006 and are expected to slip further this year, according to Germany's DIHK Chamber of Industry and Commerce.

German exporters are also criticizing the extremely slow approval rate of export permits by the German government which in turn is also confronted with intense US political pressure.

State-guaranteed export credits are also harder to come by as Germany has been one of the main providers of financing business deals with Iran, with so-called Hermes' credits amounting to around one billion euros.

The business community in Germany is concerned that it may lose Iran's lucrative market for good as the Islamic state may be compelled to seek alternative partners in the Far East like China and Malaysia.

"There is a big danger that Tehran will in the long run seek its suppliers in East Asia," said the head of the foreign trade department of the German Wholesale and Foreign Trade Association (BGA), Jens Nagel.

The chairman of the Near and Middle East Association (NUMOV), Martin Bay echoed Nagel's assessment about the potential harming effect of sanctions on German-Iranian business ties.

"If we were only traders, we could temporarily pull out of the Iranian market. But if we do this in the sectors of technology and the creation of infrastructure, we will hardly get a foot back into the door," Bay added.

Several German companies are involved in major Iranian infrastructure projects, especially in the petrochemical sector, like Linde, BASF, Lurgi, Krupp, Siemens, ZF Friedrichshafen, Mercedes, Volkswagen and MAN.

Some 50 German firms have their own branch offices in Iran and more than 12,000 firms have their own trade representatives in the country.

The President of the Federation of German Wholesale and Foreign Trade (BGA) Anton F. Boerner warned that Germany could be among the main losers of sanctions against Iran.

He stressed that sanctions would especially hurt medium-sized German companies, which depend heavily on trade with Iran.

Boerner made clear that the ongoing row over Tehran's nuclear program should be resolved through "political and not economic means." "We should avoid everything which might aggravate the crisis," he added.

Meanwhile, the DIHK has repeatedly pointed out that economic sanctions on Iran may cost more than 10,000 German jobs and have a negative impact on the economic growth of Germany.

"Economic sanctions against Iran would not solve political problems, as the example of Iraq has shown dramatically. The German economy would be severely hit in an important growth market. The loss of business in Iran could threaten more than 10,000 jobs in Germany," the DIHK said in a statement.

"If there were a real embargo, it would effectively kill off German trade with Iran," DIHK's Mideast expert Jochen Clausnitzer warned earlier.

More than 40,000 German jobs are indirectly affected by German- Iranian trade, a senior German official told IRNA, speaking on condition of anonymity.

Political observers in Berlin expect leading industry federations to boost their lobbying efforts against Iran sanctions as many heads of German companies enjoy close ties with the co-ruling party of Chancellor Angela Merkel, the Christian Democratic Union (CDU).

... Payvand News - 4/26/07 ... --

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