An Unholy Alliance

Germany appeared over the past several months to have finally fallen in line behind European Union efforts to stiffen economic sanctions against Iran. But in late October a group of German parliamentarians dealt a blow to the campaign to isolate Iran’s rulers. Bundestag Members Bijan Djir-Sarai of the Free Democratic Party, Thomas Feist of the Christian Democrats and Angelika Graf of the Social Democratic Party traveled to Tehran for a five-day visit.

Among other regime figures, the delegation met with Mohammad Javad Larijani, the head of Iran’s human rights committee, who made a name for himself in Germany by denying the Holocaust, justifying the stoning of women, and calling for the destruction of Israel during a 2008 conference in Berlin.

Predictably, the Iranian state-controlled media touted the German lawmakers’ trip as a political and moral endorsement for the regime. Iran’s Fars News wrote that Djir-Sarai was “pleased” with his visit and hope that exchange programs with “Iranian and German parliamentary officials and parliamentary friendship groups would work to bring the nations closer.”

American officials have expressed irritation with the tour. “At this particularly sensitive juncture in diplomatic relations, the international community needs to continue to send a clear, unified message to Tehran as we pressure the regime to come to the negotiating table,” Democratic Sen. Jeanne Shaheen of New Hampshire wrote in a press statement. “A formal visit at this time—no matter how well-intentioned—is counterproductive and undermines our joint efforts to put an end to Iran’s nuclear ambitions.”

Djir-Saraj’s meeting with the Chamber of Commerce symbolizes a larger problem. For years, Germany sought to strike a balance between its businesses’ desire to expand their already robust trade relations with Iran, and its commitments as a member of the six-country team pursuing a deal to stop Tehran from acquiring nuclear weapons. A comprehensive statistical account of German Iranian trade published by Germany’s federal office of statistics in Wiesbaden, covering the 1950-2012 period, shows a booming trade relation during Mahmoud Ahmadinejad’s presidency (2005 to present), resulting in over 25 Billion € of German exports to Iran. Clearly, Germany’s declaratory policy is largely undermined by its business pursuits.

In theory, sanctions are meant to exert increasing pressure on Iran’s economy, persuading its rulers to change their stance on their nuclear pursuit. In reality, Germany’s practice is evidence that Iran still gets German trade, including dual-use goods, equipment that has both a civilian and a military purpose.

According to official German statistics, German exports to Iran in 2011 were worth over €3 billion. Of these, 579 deals approved by BAFA, Germany’s export control agency, involved dual-use goods, for a total value of 65 million €. Between January and July 2012, Germany increased its exports of industrial machinery to Iran by 14.5 percent and of chemical products by 9.6 percent, over the same period a year earlier. With German exports accounting for nearly one third of the total European Union exports to Iran for 2011, this is hardly the kind of crippling sanctions touted by Western policy makers and decried by Iranian spokesmen.

Germany’s business community, largely in defiance of its government, stands behind this enduring trade relation. In 2011, the Tehran branch of the German-Iranian Chamber of Commerce published a members only booklet, which we have obtained, detailing the activities of dozens of German companies in Iran.

In some cases, such trade is innocuous. There is no harm in selling Iran ceramic tiles or strings for musical instruments. However, many of the enterprises German companies are engaging are not innocuous. For instance, according to the pamphlet, the engineering giant Herrenknecht AG is selling Iran heavy tunneling equipment, some of which it claims has the capability of “drilling down to depths of 6,000 meters.”

Herrenknecht makes no mystery of its business ties with Iran. Martin Herrenknecht, the company’s CEO, serves as vice chairman of Numov, the German Near and Middle East Association, a powerful business and government coalition that is opposed to sanctions on Iran. Through a spokesperson, Herrenknecht confirmed the sale of two Tunnel Boring Machines, for the expansion of Tehran’s metro system, and added that the company’s policies “comprehensively ensured that Herrenknecht excavation engineering and services solely reach projects which clearly pursue civil applications.”

There is no reason to question Herrenknecht’s assertion that their machines were sold for civilian purposes, but can one really trust the recipients of German technology? After all, most of Iran’s clandestine nuclear activities are dug underground, like the clandestine nuclear enrichment facility at Fordow, embedded under a mountain.

Herrenknecht insists that their Iranian partners are all private companies, but some of its technology went to a company called Sabir International. Formerly owned by a Ministry of Energy company currently run by Mohammad Sattari Vafaei, an IRGC Brigadier General formerly an advisor to Iraniran president Mahmoud Ahmadinejad, Sabir International was privatized in 2005. But privatization in Iran usually enriches government cronies.

Sabir International’s current shareholders are two companies, Sabir Niroo and Sunir. Sabir Niroo’s chairman, Seyed Esmail Mofidi, who once worked for the IRGC’s Construction Jihad, has held various government and public jobs. Sunir is a public consortium of companies that include designated or IRGC-affiliated entities such as the Fulmen Group and Mahab Ghodss Engineering. Sunir’s chairman, Mahmoud Jannatian, has been on the EU sanctions list since 2008, due to his previous job as deputy head of Iran’s Atomic Energy Organization. He is also a board member at the MAPNA group, an entity linked to proliferation efforts.

None of this suggests that Herrenknecht is directly or intentionally dealing with the IRGC. But it should make any Western company pause before doing business with partners such as Sabir International. Nonetheless, as Herrenknecht’s recent sales prove, German trade with Iran continues to grow.

In a recent Focus Magazine article, the former head of Germany’s Secret Service urged the West to convey a blunt message to Iran’s decision makers, that “sanctions will continue to be tightened” and pressure increased. But this was not the message that Dijr-Farai and his companions took to Tehran, or the signal that German companies send on a daily basis through their ongoing business.

Emanuele Ottolenghi is author of The Pasdaran: Inside Iran’s Islamic Revolutionary Guard Corps (FDD Press, 2011) and a senior fellow at the Foundation for the Defense of Democracies, where Benjamin Weinthal is a Berlin-based fellow.