Israel Matzav

Why sanctions against Iran don't work: Exhibit D - Europe

Previous posts in which I have demonstrated why sanctions against Iran are ineffective may be found here, here and here.

Friday's Wall Street Journal contained a summary of the ways in which Europe is financing Iran's drive for nuclear weapons. The summary leaves no doubt that Europe's talk doesn't match its actions. While it talks as if it wishes to prevent Iran from obtaining nuclear weapons, Europe is more interested in selfishly lining its own pockets than in stopping Iran.

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.

...

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.

Read the whole thing - it's sickening.

Two exit questions: First, what effect, if any, will the Hopenchange administration in Washington have on this situation. Will the Obama-Clinton State Department read the Europeans the riot act and tell them to stop trading with Iran? Don't bet on it. Instead, it is far more likely that Hopenchange will further weaken existent sanctions by 'working around' Europe's commercial interests.

Second, will Europe wake up to the reality that Iran is gunning for them as well? The day of Iran's satellite launch we were treated (via Israel Radio) to what seemed to be panicky statements from France and England about how the satellite launch proved that Iran was seeking ballistic missile capability that would allow it to strike them and the rest of Europe. But Iran's two biggest trading partners - Germany and Italy - were silent. About half an hour ago, Israel Radio reported that Iran is in the process of developing four more satellites. At this point, the satellites are largely irrelevant, because the key here is not the satellites but the technology to launch them. Iran seems to be taunting Europe with the satellites and yet the Euroweenies are silent. Will they wake up and stop selling advanced technology to Iran? Don't bet on it.

posted by Carl in Jerusalem @ 5:06 PM