The Corner

Why Has Germany Snubbed Obama over Iran Sanctions?

Berlin — According to a front-page story in the main German business daily the Handelsblatt, “Although [Iran] is subject to strict economic sanctions by the EU and USA, Germany helps in circumventing them.” New disclosures this week have catapulted the Hamburg-based Iranian bank EIH, the German Foreign Ministry, and Germany’s central bank (Deutsche Bundesbank) into a security disaster over Germany’s use of its bank system to finance Iran’s nuclear and missile programs. Apparently, the terror bank EIH — which the U.S. Treasury sanctioned “as one of Iran’s few remaining access points to the European financial system” — simply colluded with the Bundesbank and the Foreign Ministry to bypass EU and U.S. sanctions.

The German Foreign Ministry, which is run by the Free Democratic Party’s Guido Westerwelle, rubber-stamped massive Iran oil transactions totaling 9 billion euros. That is precisely the kind of revenue necessary to advance the Iranian regime’s drive to go nuclear; contribute to the lethal repression of Iran’s pro-democracy movement; and inject new financial life into Ahmadinejad’s terror proxies, Hamas and Hezbollah.

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.”

(This comes at a time when Germany has drifted dramatically away from the West during the Libyan conflict. French philosopher Bernard-Henri Lévy has said, “We lost a great deal of time in Libya because of the Germans.”)

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.

If Obama takes up the business of Iran sanctions with pressing urgency, he should sanction those Western, Russian, and Chinese energy companies violating the comprehensive U.S. energy sanctions. As for jolting the financial violators, he should start by imposing tough penalties on Germany’s central bank for feeding Iran’s illegal nuclear program with invaluable revenue at a time when the West seeks to cut off the economic lifeline that enables Iran’s domestic repression and its nukes.

Benjamin Weinthal is a fellow at the Foundation for Defense of Democracies.

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