Are EU Sanctions Against Iran Beginning to Evaporate?

BERLIN – Two pro-Iran business events in Europe coalesced last week, revealing an assault on the hard-fought US-EU sanctions architecture to isolate the Islamic Republic. The first Europe-Iran Forum, which took place on Wednesday and Thursday in London, stated its goal as “preparing post-sanctions investment and trade.”

European energy trade is still banned with Iran because President Hassan Rouhani’s regime has been evasive about the nature of his country’s illicit nuclear program. In exchange for slowing down its nuclear program, the world powers agreed to suspend some sanctions.

The second event, which was announced last Monday, is a slated visit of a 10-person Iranian economic delegation to the German cities of Hannover, Berlin and Hamburg from November 2-6.

The Iranian business figures have been selected from key sanctioned industries: gas, oil and the financial sector. The website of the German-Iran chamber of commerce says it will “organize individual talks with Iranian companies for interested firms.”

The German-Iranian chamber of commerce, which was a partner organization of the EU-Iran forum, boasts on its website that as of October 7, German exports to Iran increased by 33 percent.

There was some blowback, however, at the EU-Iran forum.

Sir Martin Sorrell, the chief executive of advertising company WPP, said Iran would have to resolve the nuclear crisis with the West and recognize Israel’s government, according to a report in the Financial Times. However, the financial daily noted that among the 300 participants, “Mr. Sorrell’s forthright message took many in the audience aback.”

Dr. Emmanuel Navon, the head of the political science and communication department at Jerusalem Orthodox College, told The Jerusalem Post on Sunday that Sorrell’s comments were “worse than naive. Iran’s Islamic Republic will never recognize Israel and is simply blackmailing the West and taking advantage of its naiveté.”

In contrast to Navon’s piercing criticism of the EU-Iran forum, Tommy Steiner, a senior research fellow at the Institute for Policy and Strategy at the Interdisciplinary Center Herzliya, told the Post that: “This is the first time I can recall that a world-renowned business leader has explicitly told the Iranians that reaching a nuclear deal will not be enough for integrating Iran into the world economy. The equation that Sir Martin put forward was straightforward and courageous: If Iran wants to be part of the global economy, it will have to change its policies on a wide range of issues, starting and not ending, with the nuclear file, and including Israel. That is a high bar.”

But Steiner, an expert in EU-Israel relations, added, ”overly eager, not to say drooling, business executives might send a different message to Iran – suggesting they are open for business with Iran no matter what. That is the kind of message that could kill the negotiations.”

The P5 plus 1 world powers (US, France, United Kingdom, China, Russia and Germany) have not proposed linkage between resolution of Iran’s nuclear program with recognition of Israel.

The Wall Street Journal’s Sohrab Ahmari wrote prior to the conference that some unsavory Iranian companies were listed as attendees at the EU-Iran forum: “The Middle East Bank – is on the Office of Foreign Assets Control’s list of Specially Designated Nationals, which according to the US Treasury ‘includes individuals and companies owned or controlled by, or acting for or on behalf of, targeted countries.’ Others, meanwhile, are closely associated with designated entities, even though they aren’t designated themselves.”

Ahmari was banned from attending the event because of alleged space limitations. Iran’s state-controlled press outlets were heavily represented.

A who’s who of powerhouse global companies and law firms, ranging from the auctioneer Sotheby’s to Dentons law firm, attended the event.

While the Obama administration stated that it will come down like “a ton of bricks” on companies that violate sanctions, their apparent relaxation has provided a psychological and economic boost to Iran.

Take the example of two trade fairs running from October 17-20 in Tehran. Western companies from Italy, Australia, Spain, France, Britain, Denmark Germany, and Ireland are listed as participants. The trade events cover construction machinery, mining, building materials, heating, ventilation, and air condition services.

Germany – a key Israel ally within the EU – has continued to provide Iran with dual-use equipment, which can be used for military and civilian purposes.

According to an October report in the daily Tagesspiegel newspaper, the amount of dual-use equipment sent to Iran remained “stable” over the last five years. In 2012, dual-use goods made up 13% of German exports to Iran.

That European companies still traffic at events with Iranian companies infected with unsavory reputations does not bode well for a retention of the US-EU sanctions regime prior to a comprehensive deal to stop Iran’s drive to build a nuclear weapon.

Benjamin Weinthal reports on European affairs for The Jerusalem Post and is a fellow at the Foundation for Defense of Democracies.