A New Era in the Middle East (II)

TEHERAN/HANOVER/MUNICH (Own report) – Now that the sanctions are coming to a close, German enterprises are initiating major investments in Iran and multibillion-dollar gas deals with Teheran. Over the past few weeks, several business delegations have already visited Iran. The state of Bavaria will soon open a business representation in the Iranian capital. On the one hand, German business circles have their eye on the Middle East market, because Iran “is the ventricle of an economic zone comprising a cross-border population of 400 million people.” With car sales in Iran, Volkswagen would like to compensate for the slump it is suffering on other major markets, particularly China and Brazil. On the other hand, Berlin and Brussels are trying to acquire access to Iranian natural gas. The EU Commission estimates that by 2030, Iran should be annually selling 25 to 35 billion cubic meters – probably liquid – gas to the EU. BASF natural gas subsidiary Wintershall has also shown interest. During his recent visit in Teheran, Lower Saxony’s Minister of the Economy proposed the construction of a LNG terminal in Wilhelmshaven as a German-Iranian joint venture. This is all happening at a time, when the conflict over Syria – with Iran and Russia on the one side and the West on the other – is escalating.

Attractive Market

Germany’s interest is focused on mechanical engineering and particularly on car manufacturing including subcontractors. Representatives of the Volkswagen Group had already visited Teheran last July with the German Minister of the Economy, Sigmar Gabriel and are now accompanying Lower Saxony’s Minister of the Economy, Olaf Lies. VW is seeking to compensate for the slump in sales, it had recently suffered in China and Brazil.[4] With its population of 80 million people and 1.1 million cars sold last year, Iran is considered an attractive market of the future, particularly since France’s Peugeot and Renault companies – already on hand in Iran – will probably soon bear the consequences of France’s harsh stand during the nuclear negotiations. In the short run, VW will be able to supply Iran with its China-produced cars, according to experts. However, the company will build production plants in Iran, the Iranian Minister of Industry, Mohammed Reza Nematzadeh, declared last weekend. “We have now reached a point, where VW is looking for an Iranian partner.”[5] Subcontractors will most likely follow. Continental is planning to come to Iran.

Hub Hanover

German companies are complementarily seeking to invest in Iran’s profitable transportation infrastructure. In Teheran, the Lower Saxony Minister of the Economy had held negotiations with Iran’s Vice Minister for Transportation, Housing and Urban Development. The Iranian government would like to modernize “with German help” its country’s streets and rail network, according to reports.[9] Siemens reports that it is negotiating the sales of locomotives to Iran’s railroad. Another deal being discussed, would make a rapid expansion of flight connections to Iran possible. TUI is offering to rent German planes, personnel and servicing to Iran to be flown under the Iranian flag. Three weekly flights to Teheran are proposed for a beginning. The airliners’ destination in Germany would be Hanover. The idea is to expand the airport of the capital of Lower Saxony to become the hub for flights to and from the Near and Middle East.[10]

“Really Raise a Stink”

In a next step, German business will establish a new representation in Teheran. The Bavarian Industry Association (vbw) and the Bavarian professional training institute (bbw) will open their representation in Teheran on November 1 with Bavaria’s Minister for the Economy, Ilse Aigner (CSU) in attendance. Vbw chief executive, Bertram Brossardt, underlined Iran’s importance as a regional power, “Iran is the ventricle of an economic zone comprising a cross-border population of 400 million people.”[11] He also pointed out that German businesses urgently need political support, because US competition is already heavily represented in Iran. Microsoft and Apple have opened a new main office in Teheran, General Electric is selling its household appliances, Coca Cola, its drinks. In view of the widespread fear of negative US reactions to new German-Iranian business deals, vbw CEO Brossardt demands: “The Europeans really have to raise a stink, we are fed up.”[12]

Strategic Shifts

Both the German and US business deals with Iran have been enabled by the settlement of the nuclear dispute. Their expansion comes at a time, when Russia is regaining influence in the Middle East, a stronger Iranian involvement in the Syrian war is being discussed, and geostrategic shifts are becoming increasingly clear. german-foreign-policy.com will report next week.

Full article: A New Era in the Middle East (II) (German Foreign Policy)

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