Merkel intervenes to stop Iran bank trade
German Chancellor Angela Merkel has intervened to stop billions of euros of Indian oil payments from reaching Iranian accounts via Germany, a newspaper reported on Tuesday.
Citing government sources, Handelsblatt business daily said Germany will no longer authorize its central bank, the Bundesbank, to clear the payments headed to Hamburg-based EIH — a bank under U.S. but not EU sanctions.
Israel, US pressure
Israel, whose Prime Minister Benjamin Netanyahu meets Merkel this week, wants Germany to shut down the German bank, saying it supports the spread of weapons of mass destruction by handling payments to participants in Iran’s contentious nuclear program.
EIH came under renewed scrutiny last week when it emerged Berlin had allowed India to pay for billions of euros of oil purchases from Iran via the bank, after India restricted its own direct payments to Iran to placate Washington.
The United States had pressed Germany over the matter, although Berlin officials had said their hands were tied because the bank had not broken any EU rules, which allow payments for Iranian oil and natural gas.
Germany lose
The apparent reversal has not come without a cost for German companies, which according to Handelsblatt now face hundreds of millions of dollars in bills outstanding for products ordered from Iran, some of which the oil money would have likely covered.
The move will increase pressure on Tehran, already under a series of U.N. sanctions for refusing to freeze its uranium enrichment program, which Western powers suspect is aimed at producing a nuclear weapon.
Iran denies the allegations, trumpeted loudest by the United States and Israel, that it is enriching uranium to produce atomic arms, and maintains that its programme is for peaceful energy needs.
The German newspaper Handelsblatt reported India was planning to buy Iranian crude worth €9 billion a year and transfer the money through Germany’s central bank to an Iranian bank in Germany, the European-Iranian Trade Bank (EIHB).
No comment
Germany’s government and the central bank, the Bundesbank, declined to discuss the value of the transfer plan or any further details of the agreement with the Indian government. Emails sent to the EIHB were not immediately answered Tuesday.
The bank, based in Hamburg, is not directly targeted by U.N. or EU sanctions, but has to notify authorities of all transfers to Iran above €10,000 ($14,000) and needs to get prior approval for any transfer above €40,000, government spokesman Steffen Seibert said last week.
Any transfer suspected of being connected to weapons proliferation or other exports business forbidden by the EU can be denied, the government has said – noting that oil trading is generally not targeted by sanctions.
However, facilitating business with Iran while the international community seeks to intensify pressure over its controversial nuclear program has raised questions. Germany’s opposition welcomed the government’s about-turn.
"In this way, at least, the damage to Germany’s image doesn’t go any further," said Gernot Erler, an opposition lawmaker.
In February, India’s finance minister Pranab Mukherjee said the country was working with Germany’s Bundesbank to find a way "to expedite payment to Iran."
India reportedly imports 12 million barrels of crude oil, or over 12 percent of the nation’s total, every month from Iran. This makes Iran its the second-largest supplier after Saudi Arabia.
In December, India’s central bank scrapped the long-standing mechanism the country had used to pay for Iranian oil after fresh European Union restrictions on Iran made compliance with regulations difficult.