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Germany Takes a Bullet

According to a recent report, beefing up sanctions against Iran will cost the German taxpayer dearly: new sanctions will force the German government to pay significant sums (projected at 2 billion euros) to cover the losses incurred by German business. Germany is the biggest EU exporter of goods to Iran. Hundreds of German companies have subsidiaries and offices in Iran; many more attend annual industrial fairs, looking for lucrative deals. And while German companies are not at the forefront of the oil business in Iran, German technology provides Iran with the type of industrial machinery—including drilling and refining technology—that a modern economy needs to develop.

Indeed, all protestations to the contrary, if European companies—Germany, first and foremost—were to pull out of Iran and deny Iranian customers their products, it is highly doubtful that Chinese, Indian, or Russian companies could fill the void. Quantity is less important than quality when one looks at EU-Iran trade. Sure, if European oil companies pulled out of such giant projects as the South Pars oil fields, then Russian, Chinese, and Indian companies might line up to replace them. But, those who suggest that the main reason not to expand sanctions is that they are ineffective unless these other non-Western giants also support them forget that those countries’ industries cannot compete with Western technology. (At least not yet. Otherwise, why would the Iranians be so keen to buy “made in Europe?”)

Germany and its government must be praised for their newly found resolve to pay a steep price to pressure Iran. For the U.S., the choice between profit and principle was never there—its 27-year government-sanctioned embargo of Iran means that there are virtually no American economic and commercial interests to suffer from sanctions fallout. For Europeans, it is a different story. Their choice is real—and they have been roundly criticized for preferring profit over principle. Now it’s crunch time. Bravo to Angela Merkel then, for recognizing that a financial loss is easier to come to terms with (even at that exorbitant projected cost of 2 billion euros) than a nuclear Iran. And let’s hope that Merkel’s resolve—alongside that of the British and French governments, already committed to tougher sanctions—will sway those European leaders who still think that, nukes aside, with Iran it should be business as usual.


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