Connect to share and comment

EU sanctions target Iran investments

European states curb new deals and technology transfers, but is it enough?

Iran muslims pray
Worshippers at Friday prayers in Tehran June 18, 2010. (Morteza Nikoubazl/Reuters)

BRUSSELS, Belgium — Iran was hit with a one-two punch of toughened sanctions from the United States and the European Union during the week, just days after the U.N. Security Council adopted its fourth resolution restricting dealings with the regime over Tehran’s refusal to give up its nuclear program.

Despite opposition from Cyprus, Spain and Sweden, the new EU penalties, to be laid out in more detail at a foreign ministers’ meeting in July, go beyond the U.N. measures, especially in regard to new investment, technical assistance and “transfers of technologies, equipment and services in key target areas.”

While Iranian President Mahmoud Ahmadinejad dismissed the new raft of measures, he must be worried that Brussels' move will have a bite. The 27-nation EU is Iran’s No. 1 trading partner and EU companies, unlike American ones, have maintained strong relationships with Iran even as international sanctions discouraged such business.

Germany is responsible for the largest share of it, followed by Italy and France. A year ago, German political scientist and author Matthias Kuentzel used information released by the German-Iranian Chamber of Industry and Commerce in Tehran to compile a list of 200 German companies that, to his chagrin, “want to do business with the regime.”

In 2008, Kuentzel said, the value of German exports to Iran rose 8.9 percent to almost 4 billion euros. And last year, while German exports worldwide fell by 18.8 percent due to the financial crisis, exports to Iran dropped only 5.3 percent. Nonetheless, German Chancellor Angela Merkel insists there has been “significant reduction” in German-Iranian dealings.

Kuentzel has several issues with his government’s interpretation of sanctions. He says the most effective way to change Iranian behavior would be to “completely blacklist” the Islamic Revolutionary Guard Corps (IRGC), the paramilitary organization that has come to dominate all business — including nuclear — in Iran. But since that’s never even been put on the table, Kuentzel says Germany should at least feel a “moral responsibility” to stop all trade with Iran. The IRGC was responsible for most of the violent backlash against opposition protesters after last year’s disputed elections.

But German industry has long resisted pressure to scale back its Iran trade, saying competitors will move into a niche its companies have cultivated over many decades.

Said Kuentzel: “We have to put [aside] the profit thinking and put forward the moral responsibility that we can’t deal with a terrorist nation.” 

German engineering giant Siemens has done just that.