“In Response to Iran’s Nuclear Program, German Firms Are Slowly Pulling Out” reads the headline in the February 2 edition of the New York Times. Out of Iran, one supposes. The basis for this vast generalization is the decision of a single German firm, the engineering giant Siemens, to forgo any new contracts with Iranian partners.
Siemens, moreover, is a very special case. The firm had been specifically targeted for action by the advocacy group “Stop the Bomb” — i.e., the Iranian bomb — and it was put severely on the defensive when reports were published in the very midst of last year’s post-election Iranian protests linking technology supplied by a Siemens-Nokia joint venture and Iranian regime surveillance of electronic communications. (See here, for instance, from the Wall Street Journal. A similar report had already been published in the Jerusalem Post in April, before the Iranian elections, but did not have the same impact.)
Although the accuracy of the story was challenged by both the company itself and technology experts (in the latter category, see here and here), the damage was done. The sensational reports not only sparked popular calls to boycott Siemens products, but even threats of a U.S. government boycott. Small wonder, then, that Siemens would see fit to create some separation from a market that in the grand scheme of things is of little significance for its nearly €80 billion per year turnover.
But, as the Hamburg-based political scientist Matthias Küntzel has put it in a German-language analysis recently distributed by “Stop the Bomb,” “a single sparrow does not yet make for spring.” The analysis refers to a brochure that was published in 2009 by the Tehran-based German-Iranian Chamber of Commerce and Industry and that bears the title “Branch Offices, Representations and Agencies of German Companies in Iran.”
On Küntzel’s count, the brochure identifies no less than two hundred German companies doing business in Iran. Of these, some forty-five have permanent branch or representative offices in the country. The latter include such well-known German industrial heavyweights as BASF, Bayer, Bosch, Daimler, Lufthansa, Henkel, Siemens, and ThyssenKrupp. Several of these firms, as well as numerous smaller, lesser-known German engineering firms, specialize in activities that could readily be of relevance for the Iranian nuclear program. Küntzel has compiled a list of nearly eighty firms whose products, he suggests, could potentially have “military applications.”
While officially recorded German exports to Iran have fallen off from a high of nearly €4.5 billion in 2005, they rose by nearly 9% to just under €4 billion in 2008. Last year, they declined again by some 8%. But, as Küntzel points out, in light of the global financial crisis, this was a relatively good result. Overall, German exports fell by over 18% in 2009.
Moreover, it has long been an open secret that some German suppliers avoid unwelcome notice — and the official statistics — by shipping to Iran via the United Arab Emirates (UAE). The New York Times appears only now to be catching on. Thus the Times report cites an unnamed German business executive who knowingly observes that “Dubai is Iran’s biggest trading partner, yet Dubai produces nothing.” Dubai is one of the emirates composing the UAE. After “confessing” that German companies do business with Iran via Dubai, the anonymous source then cattily and irrelevantly adds that “the Americans” do the same — and even “the Israelis” something similar!
But leaving Americans and Israelis aside, one does not need anonymous sources in order to know about Germany’s hidden trade with Iran via the UAE. Thus in November 2007, Iran’s Press TV cited the German ambassador to Tehran at the time, Herbert Honsowitz, to the effect that
There has not been any decrease in German exports to Iran in the wake of the recent trade restrictions and Security Council-mandated sanctions, but a significant part of the German exports is being routed via the United Arab Emirates.
The Press TV report puts the volume of German trade via the UAE at $4 billion “in the last year.” If accurate, this would mean that Germany’s real volume of exports to Iran in 2007 was nearly double the official figure. As Küntzel points out, a November 2009 note published on the website of the German-Iranian Chamber of Commerce and Industry openly states: “The greater part of shipments [to Iran] from the UAE are re-exports from third countries: among others, from Germany and China.”
The anonymous source cited in the Times report suggests that German businesses are resorting to the indirect Dubai route as a consequence of increasing “pressure from Berlin,” i.e., presumably to cease their business activities in Iran. Küntzel, however, has obtained evidence that semi-official German agencies are in fact actively encouraging the practice. Thus he cites the minutes of a November 17, 2009, meeting held by a working group of the German-Emirati Joint Council for Industry & Commerce. Küntzel reports that the document sets out the following as one of the major aims of the group: “How to do business in Iran through Dubai. … Practical steps to do business in Iran.”
Perhaps it is no coincidence, then, that in the very year that German exports to Iran apparently began to contract in response to international pressure, German exports to the UAE experienced a massive spike. A December 18, 2006, report published by the German public agency, Germany Trade and Invest, commented upon the “booming” German-Emirati trade as follows:
Only recently, the UAE replaced other heavyweights like Saudi Arabia or Iran as Germany’s most important trading partner in the Middle East. In 2005, Iran still received more German exports than the UAE. In the first nine months of 2006, the relationship got inverted. German shipments to the UAE increased by 21.5% to some €3.84 billion. A large part of these exports, however, are re-exported to other countries in the region, such that the UAE trade proper is thus somewhat over-estimated.
“Up to 2004, Iran was the most important re-export market for the UAE,” the Germany Trade and Invest report discreetly adds, “In the meanwhile, India has taken over this position.” It would be interesting for a trade specialist to try to put this latter claim to the test. The Germany Trade and Invest report appears no longer to be available on the agency’s website. A Google-cached version is available here.
Matthias Küntzel ends his analysis on a hopeful note. “A single sparrow does not yet make for spring,” he repeats, “but it is a sign of changes to come.” Well, maybe. The fact is that none of the other German firms doing business in Iran have been subject to the sort of opprobrium that Siemens has. Perhaps now they will be as a result of Küntzel’s revelations.
It remains to be seen whether the simple fact of doing business in Iran will bear the same stigma as allegedly aiding the Iranian regime to spy on and repress its own population. More to the point, if the Iranian business activities of any of the firms on the list are of relevance to Iran’s nuclear program, then the real question is not one of stigma and voluntary withdrawal from the Iranian market. Such firms — and Germany itself, to the degree that it has facilitated or turned a blind eye to their activities — will be violating existing UN Security Council resolutions.
In any event, and more prosaically, one thing at least is sure, and ought perhaps to be kept in mind by the editors of the New York Times. A single case does not make a trend.
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