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Germany Between A Rock And A Hard Place Over Iran Deal

Germany is moving cautiously but steadily toward resuming its once-close trade relationship with Iran, but with an important condition: Tehran must be open to improving its relations with Israel.

Sigmar Gabriel, Germany’s vice chancellor and economy minister, said on July 20 that the two countries would hold a ministerial-level meeting of their economic commission in early 2016 in Tehran. Gabriel made the comment during a meeting with Oil Minister Bijan Zanganeh in the Iranian capital.

It was the first visit to Tehran by a senior German official in 13 years, and the first by a high-ranking official of any Western government since the deal between Iran and six world powers on monitoring Tehran’s nuclear program.

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Germany once was Iran’s biggest trading partner with Iran, but Gabriel warned that there can be no resumption of these ties unless Tehran eases its attitude toward Israel and considers improved relations with the Jewish state. “Questioning [Israel’s] right to existence is something that we Germans cannot accept,” Gabriel said July 19, the first day of a three-day visit to Tehran.

The German minister also indicated that Berlin would like to help improve the relationship between the two sworn enemies. “You can’t have a good economic relationship with Germany in the long term if we don’t discuss such issues and try to move them along,” he said.

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After the Nazi atrocities of World War II, Germany has carefully nurtured a close relationship with Israel. As a result, it is in a somewhat uncomfortable position with this close ally as it now seeks to restore economic ties with Iran.

Besides Zanganeh, Gabriel was to meet with Iranian President Hassan Rouhani and several cabinet ministers, and expressed an interest in speaking with human rights representatives as well. The United Nations has accused Iran of violating the rights of women, religious minorities, political activists and journalists.

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In Tehran, Gabriel was leading a delegation of German business leaders who are eager to resume trade with Iran. In 2005, German exports to Iran were valued at 4.4 billion euros, but ever-tightening sanctions reduced exports to a value of 1.8 billion euros by 2013. Those sanctions are expected to be lifted under terms of the nuclear deal reached on July 14.

Not surprisingly, the German business people are particularly interested in Iran’s energy production. In the 1970s, the country’s output exceeded 6 million barrels of oil per day, but that has now fallen to less than 4 million barrels per day during the past 10 years due to both the sanctions and Tehran’s resulting inability to invest more generously in its energy sector.

Now things are looking more optimistic, both for Iran and its potential trading partners, according to Zanganeh. “There is no country in the world where petrochemicals are so easy to access and so inexpensive,” he said. “I hope that German and Iranian firms can find each other."

By Andy Tully of Oilprice.com

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