How Europe's Companies Are Feeding Iran's Bomb

By BENJAMIN WEINTHAL
Wall Street Journal Europe

While the U.S. has ratcheted up its efforts to prevent Iran from obtaining nuclear arms, the Islamic Republic is
reaping a windfall from European companies. These firms' deals aid a regime that is bent on developing nuclear
weapons and which financially supports the terror organizations Hamas and Hezbollah.

The Austrian oil giant OMV is itching to implement a €22 billion agreement signed in April 2007 to produce
liquefied natural gas from Iran's South Pars gas field; at last May's annual shareholder meeting, Chief
Executive Officer Wolfgang Ruttenstorfer said OMV was only waiting for "political change in the U.S.A."
Raiffeisen Zentralbank, Austria's third-largest bank, is active in Iran and, according to a story by the Journal's
Glenn Simpson last February, has absorbed the transactions of key European banks that shut down their
operations in Iran. And in late January Paolo Scaroni, CEO of Italian energy corporation Eni SpA, told the
Associated Press that his firm will continue to fulfill its contractual obligations in Iran and feels no external
pressure to sever ties with Iran's energy sector.

Yet because of the sheer volume of its trade with Iran, Germany, the economic engine of Europe, is uniquely
positioned to pressure Tehran. Still, the obvious danger of a nuclear-armed Iran has not stopped Germany from
rewarding the country with a roughly €4 billion trade relationship in 2008, thereby remaining Iran's most
important European trade partner. In the period of January to November 2008, German exports to Iran grew by
10.5% over the same period in 2007. That booming trade last year included 39 "dual-use" contracts with Iran,
according to Germany's export-control office. Dual-use equipment and technology can be used for both military
and civilian purposes.

One example of Germany's dysfunctional Iran policy is the energy and engineering giant Siemens. The
company acknowledged last week at its annual stockholder meeting in Munich, which I attended, that it
conducted €438 million in trade with Iran in 2008, and that its 290 Iran-based employees will remain active in
the gas, oil, infrastructure and communications sectors.

Concerned stockholders and representatives from the political organization Stop the Bomb, a broad-based
coalition in Germany and Austria seeking to prevent Iran from building a nuclear-weapons program, peppered
Siemens CEO Peter Löscher with questions about the corporation's dealings with the Iranian regime. A Stop the
Bomb spokesman questioned Siemens's willingness to conduct business with a country known for its human-
and labor-rights violations, ranging from the violent oppression of women to the murder of gays to the
repression of religious and ethnic minority groups. The spokesman referred to Siemens's Nazi-era history as an
employer of forced labor from the Auschwitz extermination camp and asked how, in light of the corporation's
Nazi history, the company could support an "anti-Semitic and terrorist regime" that threatens to wipe Israel off
the map.

Mr. Löscher replied to the 9,500 stockholders in Olympic Hall that, "For Siemens, compliance and ethics have
the highest priority, including where human-rights issues are involved." Yet, after further questions from the
Stop the Bomb spokesman, he acknowledged that Siemens and its joint partner, Nokia, had delivered state-of-
the-art communications surveillance technology to Iran last spring.

Information-technology experts say that the companies' "monitoring centers" are used to track mobile and land-
line telephone conversations, and that their "intelligence platform" systems allow the Iranian secret service to
track financial transactions and airplane movements. The technologies could also be used to monitor persecuted
minority and dissident groups in Iran.

Siemens, the largest German trade partner of Iran, represents a window onto an opulent economic partnership
between the two countries. German firms such as Mercedes-Benz, whose Web site lists an Iranian general
distributor, and insurance giant Munich Re have also remained indifferent to the growing calls to isolate Iran
economically. Yesterday, a Munich Re spokesman confirmed to me that the company insures goods in transit to
Iran. This was the first such public disclosure by the firm.

And the deals just keep on coming. The Hannoversche Allgemeine newspaper, for example, reported in late
January that the German engineering firm Aerzen secured a contract totaling €21 million to supply process gas
blowers and screw-type compressors to a steel factory in Esfahan, Iran.

All of this is taking place while Iran is moving at an astonishing pace to process high-grade uranium for its
atomic bomb. Iran's launch of its first domestically produced satellite on Tuesday prompted an alarmed French
Foreign Ministry spokesman Eric Chevallier to underscore the link between Iran's military nuclear capability
and its compatibility with the satellite technology.

Trade and security experts assert that Iran cannot easily replace high-tech German engineering technology
with that from competitor nations such as China and Russia. The hollow pleas by Chancellor Angela Merkel,
who favors a policy of moral pressure to convince corporations to be "sensitive" about cutting new deals with
the regime in Tehran, did not prevent her administration from approving over 2,800 commercial deals with Iran
in 2008.

Transparency is badly needed in this area. The German Federal Office of Economics and Export Control
(BAFA) refuses to disclose the nature of these agreements. Economics Minister Michael Glos, who oversees
BAFA and is considered an advocate of trade with Iran, should reveal the names of the firms commencing trade
with a country that sponsors terror organizations such as Hezbollah and Hamas. The German firms are hiding
behind a wall of nondisclosure to avoid being blacklisted on the U.S market.

The Merkel administration heavily subsidizes investments in Iran by providing German firms with €250 million
in credit guarantees. A day before the International Holocaust Remembrance Day on Jan. 27, the German
business daily Handelsblatt reported that Berlin intended to discontinue all credit guarantees supporting trade
with Iran. After the report was picked up by the major media, Mrs. Merkel's spokesman quietly denied that the
government had canceled the credit guarantees. This suggests that Berlin cynically leaked the story to
Handelsblatt to polish its international image and repair strained relations with Israel, a country whose security
Chancellor Merkel has deemed "nonnegotiable" for Germany.

There are other signs that Germany's political elites consider Iran just another trading partner. Former
Chancellor Gerhard Schröder is scheduled to visit Iran in late February, just after 10 days of celebrations in the
country honoring Ayatollah Khomeini and the radical Islamic state he ushered in 30 years ago. Mr. Schröder,
who plans to attend the dedication of a foundation for supporting scientific research and has opposed the
imposition of sanctions on the Iranian regime, surely will not use the opportunity to criticize Germany's booming
trade relationship with the Islamic Republic of Iran.

In short, while Berlin claims it wants to discourage Iran from building a nuclear bomb, it has so far done little to
actually stop the bomb. German legislation prohibiting trade with Iran, coupled with an immediate cessation of
credit guarantees, would decisively setback, if not stop, Iran's nuclear weapons program and set an invaluable
example for other EU countries to adapt for their own companies.
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