TEHRAN - Companies across Germany are seeking to renew once-strong commercial ties with Iran, as Western governments have granted Iran some relief from sanctions over its nuclear program.
Around 100 German companies have branches in Iran and more than 1,000 businesses operate through sales agents, according to the German-Iranian Chamber of Industry and Commerce.
Germany was the leading European trading partner of Iran in the previous Iranian calendar year, which ended on March 20, customs data shows.
Germany exported $2.451 billion worth of non-oil goods to Iran and imported $335 million of non-oil goods from Iran in Iranian year 1392 (March 2013-March 2014).
If Western companies are allowed back into Iran, German firms stand well positioned. Before the UN Security Council imposed sanctions in 2006, German giants, including auto maker Daimler and biotech Bayer AG, were big players in Iran. Industrial conglomerate Siemens AG entered the Iranian market in 1868. When the sanctions tightened in 2010 and 2012 due to concerns over Iran’s nuclear program, most of the German giants withdrew or shunned new deals.
Now they’re being pulled back by possibilities of a young, educated population hungry for consumer goods and manufactured products. Iran’s huge oil and gas reserves are another big draw. The German Chamber of Industry and Commerce, known as DIHK, estimates German exports to Iran could quickly top €10 billion annually if sanctions are relaxed, from €1.85 billion last year.
In an exclusive interview with the Tehran Times, Moghtadi Kermanshahani, the president of the German–Iranian Chamber of Industry and Commerce, expounded on activities of the Chamber and factors which have affected commercial ties between the two countries.
Following is the text of the interview:
Q: Would you please brief us about the history, current status, mission, and objectives of the German–Iranian Chamber of Industry and Commerce?
A: The German–Iranian Chamber of Industry and Commerce was established 40 years ago. It currently has about 2,400 members, comprising 2,000 Iranian businessmen, industrialists, and traders, as well as 400 German counterparts. The main role of the Chamber is to boost commercial links between Iranian and German traders.
The Chamber is tasked with identifying industrial and technological needs of the two sides and offering solutions to resolve the extant problems. In other words, the Chamber’s role is to facilitate bilateral trade through providing the members with commercial services.
Germany has been one of the leading trading partners of Iran since the Islamic Revolution in Iran of 1979.
Q: How do you compare the volume of bilateral trade before and after the imposition of Western sanctions on Iran?
A: Industrial and economic relations between Iran and Germany date back to over 100 years ago. The two countries are cooperating in different fields of industry, mainly the power and the petrochemical sectors.
Although the Western sanctions have sharply declined the trade between Iran and Germany, the German–Iranian Chamber of Industry and Commerce has been planning to provide support for industrialists and businessmen and pave the way for them to increase bilateral trade.
Prior to the imposition of Western sanctions on Iran, Germany exported about €6.5 billion goods to Iran annually and imported about €2 billion goods from Iran.
However, the banking sanctions hampered the transaction of money between Iranian and German traders, and as a result, bilateral trade dropped to about €1.7 billion in 2013.
Germany exported €1 billion worth of goods, mainly machinery, spare parts, and raw materials, to Iran over the past 12 months. Meanwhile, Iran exported €250 million worth of goods to Germany in the same period.
It is hoped that the negotiations between Iran and the EU would be fruitful, so that the sanctions are lifted and bilateral trade is increased.
Q: Which areas are of more interest to German companies for investment?
A: German companies are very interested in investing in Iran’s oil, gas, and petrochemical projects. Iran's refineries need to be equipped with the latest modern technologies to sweeten gas for use in the national gas network, [and these are] projects which German companies would like to invest in.
Q: The German ambassador to Tehran believes that Iran’s high inflation rate and customs charges have impeded the operation of German companies in Iran, to the extent that even the lifting of sanctions might not ensure their return. What is your opinion?
A: This is right. Job creation will be the main concern in Iran over the next decade, considering the population growth rate in the country. Hence, one million jobs must be created per year on average to meet the needs of the job market. And the goal will not be achieved without investment, both by domestic and foreign investors.
As much as $100 billion should be invested per year in infrastructure sectors such as the oil, gas, petrochemical, transportation, and energy sectors. Some 60 percent of the sum should be invested by foreign companies.
To attract foreign investment, we need to guarantee return on capital and provide incentives. Countries like Malaysia, Indonesia, the Philippines, and Turkey, which have experienced success in attracting foreign investment, offered incentives, such as free land, water, and power supplies to foreign investors.
To attract domestic investment, both state-run infrastructure industries and privately-owned industries should be supported. Small and medium-sized enterprises are normally run by the private sector all over the world.
Q: Germany was the 11th leading importer of Iranian goods, the first among European countries, and the 6th leading exporter to Iran in the previous Iranian calendar year. Which policies should be adopted to increase Iranian exports to Germany?
A: In my opinion, boosting national economic growth, promoting job creation, and expanding international relations are the most important policies. Indeed, the importance of services for boosting tourism is undeniable.
The promotion of hotel management based on international standards requires particular attention. It has been proposed that a center for hotel management be established in Iran in cooperation with German or Swiss colleges in order to transform this sector of the country.