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GERMANY IRAN Irans importance: - political, economic, cultural contacts developed since early 1950s - an analytical centres dealing

g with politico-economic situation in Iran - Germanys trade partner rank in MidEast: 1. Saudi Arabia 2. UAE 3. Iran (only #3 due to sanctions and political pressure directed to Germany to limit firms activities) - 35% of Irans import coming from Germany (19% Italy, 16% France) such as machines, equipment, and technologies - gas crises > need to diversify sources of energy > engage actively in Nabucco gas pipeline (would supply gas to EU from Central Asia and also from Iran in the future) - Iranian energy minister visited Berlin in May 2009 - German companies still making contacts and looking for possible cooperation when political climate is more favorable - desire to increase Germans significance in MidEast since late 1990s (due to existing influence of USA and France) > this significance makes Germany 5+1 (mediator role) Germanys Policy before 2005 (under Gerhard Schroder) - change through rapprochement - enhancement of two-direction political visit - enhancement of economic contacts (increasing export guarantees, investment protection, promotion of German exports) - opposite of US proposal to isolate Iran by gradually extending economic sanctions, trying to convince European allies to adopt similar strategy (this affected US-German relations) - insist on using diplomatic & economic (peaceful) measures, policy of dialogue and cooperation Germanys Policy after 2005 (under Angela Merkel) - several factors affect sharpening: 1. Election of Ahmadinejad (anti-Israel statements, challenging existence of Holocaust), 2. Policy dialogue adopted by EU3 failed (Iran didnt stop enrichment, rejected European politico-economic offer in 2005), 3. Christian Democrats won (want tougher stance), 4. Desire to improve US-German relations - supported gradual imposition of sanctions by UNSC led by P5+1 and expansion of sanctions by EU - sharper words, reduced export guarantees gradually for German companies (caused gradual decrease in German exports to Iran) Dilemma - mutually contradictive goals: 1. Closer relationship with Iran (economic and strategic), 2. Improve relationship with US (has to increase economic pressure to Iran) - result: lack of decisive measures to limit German-Iranian trade relations, support political cooperation with Iran in less controversial areas - in 2009 (election & suppression of Green Movement), rhetoric sharpened yet no real change in previous policy - criticized by US (doubt that Germany will agree to impose further sanctions if next resolution isnt backed by R&C) - German companies (used to be states support in past foreign expansions) oppose reduction of export guarantees related to Iran, wanting to finalising existing German-Iranian projects worth of billions of euros and expand contacts with Iran

demand for German products shrinks due to global crisis, increasing business lobbying, most of MidEast expert oppose sanctions political isolation of Iran isnt Germanys interest (will not cut dialogue by continuing less controversial areas such as Afghanistan border protection, support for return of Afghan refugees, combatting drug trafficking from Afghanistan), wanting to maintain good perception of Germany without cooling relations for a longer period