Berlin ♥ Iran

Wall Street Journal
Thursday, July 31, 2008

In the first speech by a German chancellor to the Knesset, Angela Merkel earned Israel's respect in March by insisting that Iran's nuclear program must be stopped and that, if necessary, "Germany will push for further sanctions."

Oh, really? It now turns out that only a month earlier, Germany's Export Control Office had given the green light for a €100 million ($157 million) gas deal with Iran. Business interests, it seems, trump any proclaimed concerns for Israel's security.

Berlin's refusal to use its considerable economic leverage over Tehran puts it at odds not only with Washington but increasingly with its European partners in London and Paris. Following February's export approval, SPG Steiner-Prematechnik-Gastec will build three plants that turn gas to liquid fuels in the Islamic Republic, the Siegener Zeitung reported last week. Ms. Merkel's assurance that Israel's security is "nonnegotiable" is further put in doubt by the fact that her party colleague, Hartmut Schauerte, had been pushing the Export Control Office to speed up the process.

The Export Control Office denies to us that any political interference took place but the company, which is located in Mr. Schauerte's electoral district, seems to disagree. Without him, "there would have been nothing," SPG owner Bernd Steiner told the Siegener Zeitung. "We'd still be waiting."

The news about the Iranian deal comes as British Prime Minister Gordon Brown has been pushing European leaders to extend sanctions to include liquefied gas technology. And in September, Paris urged French companies not to respond to Iranian tenders.

At least one French company seems to have gotten the message. After Iran test-fired long-range missiles this month, Total pulled back from a liquefied gas project. The company "would be taking too much political risk to invest in Iran," Chief Executive Christophe de Margerie told the Financial Times.

SPG doesn't seem to have such worries. Its gas deal is just one recent example of Germany's still-blossoming commercial relationship with the mullahs. True, exports to Iran have declined in the past couple of years -- not least due to U.S. pressure. But imports from Iran rose 28% last year. And German exports to Iran are on the rise again, up 13.6% in the first quarter.

Meanwhile, Germany is increasingly siding with China and Russia to give diplomacy yet another chance even as Iran's regime shows no willingness to respond to the carrots. Ms. Merkel's speech in the Knesset, considered "historic" only four months ago, already sounds hollow.