Israel Matzav

Why the Germans are busting the Iran sanctions

Benny Weinthal has been all over the EIH Bank story since he broke it at the end of last week (and even before). In a nutshell, the Hamburg-based German-Iranian bank colluded with the German Central Bank (the Bundesbank) to clear some 9 billion euros in oil transactions for the Iranians.

But the real question is why. Why is the German Central Bank so ready to flaunt the international sanctions against Iran? Benny has the answer, and once again it's Obama.

The Bush administration enjoyed remarkable success in pressuring German chancellor Angela Merkel to recoil from some of her country’s pro-Iran bank policies — including twisting her arm to pull the plug on German banks active in Iran — but Obama’s verbal powers have proved to be largely impotent. It is worth recalling that President Obama called Chancellor Merkel last year and urged her to shut the EIH operation, according to veteran columnist John Vinocur: “[I] have been told that similar reluctance, this time involving German hesitation to clamp down on a bank in Hamburg facilitating suspect European deals with Iran, resulted in a recent phone call, to no immediate avail, from Mr. Obama to Chancellor Angela Merkel.”

Over at The Weekly Standard, my colleagues Mark Dubowitz and Laura Grossman note:

President Obama made sanctions on Iran’s energy sector a central part of his strategy in dealing with Tehran. With Iran continuing its march toward obtaining nuclear weapons, the selection of a single Iranian company and now a lone Belarusian one — among scores of companies that are now likely in violation of U.S. sanctions law — has not inspired congressional confidence. Nor are these sanctions likely to frighten major players in the international energy industry.

In short, while the first Merkel administration feared that George W. Bush would penalize German banks and firms because of their flourishing Iran business deals, the second Merkel administration sees Obama’s Iran-sanctions strategy as wallowing in non-enforcement. All of this helps to explain why Chinese and Russian firms — two of the major sanctions-busters — are not running scared from the Obama administration either.

I guess that's what happens when your leadership decides that you're not a superpower anymore: No one thinks they have to listen to you.

What could go wrong?

Labels: Angela Merkel, Barack Obama, Bundesbank, EIH Bank, Guido Westerwelle, Iran sanctions regime

posted by Carl in Jerusalem @ 10:37 AM