Last Updated: Mon Nov 01, 2010 11:53 am (KSA) 08:53 am (GMT)

Siemens quits Iran amid rising diplomatic strain

Siemens said it would stop signing new business deals in Iran from mid-2010 (File)
Siemens said it would stop signing new business deals in Iran from mid-2010 (File)

German industrial giant Siemens said Wednesday it would stop signing new business deals in Iran from mid-2010 as tensions grew between Berlin and Tehran, which said it had arrested two German diplomats.

"The board has decided not to conclude new contracts with commercial partners in Iran," company spokesman Alexander Becker told AFP, adding that a decision had already been taken to this effect within the company last October.

"There are clients that have offers on the table that expire by mid-2010 at the latest ... from this date onwards, there will be no new business," added the spokesman.

 The board has decided not to conclude new contracts with commercial partners in Iran 
Spokesman Alexander Becker

The comments came as Tehran said it had seized two German diplomats for allegedly having a hand in anti-government protests last month.

"Two German diplomats using fictitious names of Yogi and Ingo were arrested" during the Shiite commemoration of Ashura, the website of state television quoted an unnamed deputy intelligence minister as saying.

Andreas Peschke, a foreign ministry spokesman in Berlin, dismissed the reports, saying the ministry had no information on arrests that day.

A leading exporter

 Two German diplomats using fictitious names of Yogi and Ingo were arrested 
Unnamed Iranian deputy intelligence minister

Germany is one of the world's leading exporters to Iran, although pressure to roll back dealings with the regime in Tehran has grown as the international community mulls sanctions over its disputed nuclear program.

Chancellor Angela Merkel said Tuesday that German-Iranian trade had "declined considerably" while acknowledging that the two countries had a "long tradition of economic cooperation."

A spokesman from the national statistics office told AFP on Wednesday that exports to Iran had dropped by eight percent between January and November 2009, according to the most recent data.

However, total German exports plunged by 19 percent over this period, as the economy, Europe's largest, was battered by a global slump in demand for goods made in Germany during the world financial crisis.

In 2008, German exports to Iran, mainly machine tools and industrial equipment, rose by nearly nine percent despite international condemnation of the regime in Tehran.

For her part, Merkel warned on Tuesday that time was running out before the international community considers sanctions, adding that February would be the "crucial month" in the UN Security Council.

Sanctions on Iran would only work if applied "over the broadest possible basis," Merkel added, following talks with Israel's President Shimon Peres.

Berlin has already reduced to a trickle the special export guarantees crucial to companies trading with Iran.

In no rush

 In the interest of security of supply for Germany and Europe we are in talks with many producers of natural gas, amongst others Iran 
Spokesman for E.ON gas unit

Siemens' decision to wind down business with Iran found few followers among German companies on Wednesday, despite mounting pressure to cut ties over the Islamic Republic's sensitive nuclear work.

While some sectors such as machinery and banking are already seeing a decline in business with Iran, others are seeking new trade there, including some keen to tap Iran's hold on the world's second-largest natural gas reserves.

"In the interest of security of supply for Germany and Europe we are in talks with many producers of natural gas, amongst others Iran," a spokesman for energy group E.ON's gas unit said, reiterating the company's stance.

No German companies are exploring for oil in Iran, which remains a net importer of gas given its creaky infrastructure.

The United States has pressed for greater restrictions on foreign trade and investment with Iran but Siemens is the only major German company to ban new business with Iran outright.

Many German companies view deals with the country as a tiny part of their overall business. Bayer and Linde for instance called it "small" and "not substantial" respectively.

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