With Iran no more shackled by U.S. led economic sanctions, Germany has taken the lead, given its historic ties with Iran, in restoring normality between the two nations and boosting trade ties.
With Sigmar Gabriel’s, Germany’s Economic Minister, paying a two-day visit to Iran, Siemen has signed a contract to upgrade Iran’s ageing railway network. This is just one of the several deals signed by both countries during this visit.
Gabriel’s visit to Iran was with a flock of 120 managers who are keen to re-establish business relations with Iran after it reached a landmark deal to scale back its nuclear program.
However, with a range of U.S. sanctions yet in place, political concerns are holding businesses back due to a lack of clarity on the situation.
Although Siemens has disclosed that it will be supplying 50 diesel-electric locomotives to Iran it has however not disclosed the value of the deal, which could be estimated to be in the low hundreds of millions of euros.
Small to medium sized German companies, including, INTRA Industrial Solutions, the SMS Group, and steel manufacturing plants have signed multiple deals with their Iranian partners.
Furthermore, Mitsubishi Germany has also signed a contract to modernize a gas-fired plant, while Keller HCW, a plant constructor, plans on building a brickyard in Iran.
Significantly, central banks of both countries have agreed to cooperate on technical financial matters.
Although the exact number of deals signed and their individual or aggregate value have not been disclosed, as per Iran’s Deputy Economy Minister, Mohammad Khazaei, 10 economic deals are scheduled to be signed during Gabriel’s visit.
“I hope that this will smooth the way between both countries,” said Khazaei.
Incidentally, Germany has had cultural and commercial ties with Iran that stretches back to the 19th century.
Despite the apparent bonhomie, Gabriel has warned Tehran that it must accept Israel’s right to exist and stop its interference in Syria’s civil war, in which it is backing Syrian President Bashar al-Assad regime.
At the same time, Gabriel has stated that Germany wants to help Iran push ahead with its reforms and promised to remind the U.S. of its commitments to reduce existing sanctions.
So far the German banking sector has been dragging its feet to underwrite business deals which could potentially fall foul of existing U.S. sanctions. Gabriel has promised to remind the United States of its commitments to reign in and reduce existing sanctions. He also underscored the fact that Germany wants to help Iran push ahead with its reforms.
According to Michael Tockuss, head of the Hamburg-based German-Iranian Chamber of Commerce, Germany’s exports to Iran have jumped by 15% during the first half of this year to touch 1.13 billion euros. By the end of this financial year, it could touch as much as 4 billion euros.
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