Germany, Iran pledge to revive economic relations
July 20, 2015 | 8:15 PM
by Reuters
Iranian President Hassan Rouhani, right, welcomes German Economy and Energy Minister Sigmar Gabriel, centre, and members of his delegation, in Tehran on Monday. Gabriel flew to Iran, becoming the first top Western official to visit the country since world powers and Tehran reached a historic nuclear deal. Photo - AFP

Tehran/Brussels: Germany and Iran moved tentatively on Monday towards reviving a once close trade relationship, anticipating the lifting of western economic sanctions against Tehran following a landmark nuclear deal.

Also on Monday, the European Union approved the Iran nuclear deal with world powers, a first step towards lifting Europe's economic sanctions against Tehran that the bloc hopes will send a signal that the US Congress will follow.

German Economy Minister Sigmar Gabriel, making the first top level German government visit to Tehran in 13 years, indicated that a ministerial-level meeting of a long dormant German-Iran economic commission would take place early next year in Tehran.

Gabriel signalled the move at a meeting with Iranian Oil Minister Bijan Namdar Zangeneh during the visit, which is also the first to the country by a senior member of a Western government since the nuclear agreement last week.

Gabriel is travelling with a delegation of German industry representatives, who are keen to move back into the Iranian market, particularly the lucrative energy sector.

German exports to Iran hit 4.4 billion euros in 2005 but then slumped to 1.8 billion by 2013 as the West tightened the sanctions imposed over Iran's nuclear programme. However, the agreement between Iran and six world powers including Germany has opened the prospect that the sanctions will be removed.

Iran once produced more oil than Saudi Arabia and was able to extract more than 6 million barrels per day in the 1970s, but its output has fallen below 4 million bpd over the past decade due to the sanctions and under-investment.

"There is no country in the world where petrochemicals are so easy to access and so inexpensive," Zangeneh said. "I hope that German and Iranian firms can find each other."

For decades, Germany was Iran's biggest trading partner in Europe. Last year, German exports to Iran rose to 2.4 billion euros in anticipation that the sanctions might be eased, but German industry associations have said they could quadruple to 10 billion within a few years. German machinery, auto, chemicals, healthcare and renewable energy firms are likely to be the biggest beneficiaries of an opening up of the Iranian market.

Wolfgang Buechele, chief executive of German industrial gases group Linde, saw the greatest demand in the oil and gas sector. "Especially German plant and mechanical engineers could benefit from it," Buechele told German magazine Der Spiegel, noting that German consumer goods manufacturers could benefit in a later stage.

The trip is a delicate one for Gabriel, in part because of Germany's close ties to Israel.

Israel opposed the deal struck on Tuesday, under which sanctions imposed by the United States, European Union and United Nations will be lifted in exchange for Iran agreeing long-term curbs on a nuclear programme.

Gabriel said in Tehran on Sunday that closer economic ties with Iran depended on it improving relations with Israel.

He also told his hosts that Germany and other western countries expected Iran to assume "new responsibilities" following the nuclear deal, including taking on a bigger role in promoting the peaceful resolution of conflicts, in particular in Syria.

Speaking at a joint news confernce with Gabriel, Iranian Foreign Minister Mohammad Javad Zarif did not touch on the issue of Israel directly, but said: "Of course we have differing political views. But we can talk about these differences of opinion."

Meanwhile, in a message mainly aimed at sceptical voices in the US Congress and strong resistance from Israel, EU foreign ministers meeting in Brussels stressed that there was no better option available.

"It is a balanced deal that means Iran won't get an atomic bomb," said French Foreign Minister Laurent Fabius. "It is a major political deal."

Ministers left the details of their endorsement until after a UN Security Council vote scheduled for 9am EDT (1300 GMT), but have formally committed to a gradual lifting of sanctions along with the United States and the United Nations.

The European Union will retain its ban on the supply of ballistic missile technology and sanctions related to human rights, EU diplomats said.

A senior Western official involved in the accord said a combination of limitations and verification was enough to ensure Iran would not obtain a nuclear bomb.

"Our ambition is to embed the Iranian civilian nuclear programme into international cooperation," the official said.

The US Congress received the Iran nuclear agreement on Sunday and will have 60 days from Monday to decide whether to approve or reject the deal.

Keen to consider Iran as an alternative supplier of energy at a time of tensions with Russia, the European Union may reopen an EU delegation in Tehran and is seeking business opportunities in the country.

"The Iran deal has a geopolitical impact and also an economic impact on the European Union," said Austria's Foreign Minister Sebastian Kurz, who plans to visit Iran in September.

German Vice Chancellor Sigmar Gabriel flew to Iran at the weekend, becoming the first senior figure from a large Western government to visit the country since the deal. France's Fabius is also due to travel there soon.

French automakers had a strong presence in the Iranian car industry before Iran's isolation over the nuclear issue, and Total was active in the oil sector.

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