Germany is resisting international pressure to freeze the activities of an Iranian-owned bank based in Hamburg that U.S. officials say provides the financial lifeblood for some of Iran's blacklisted companies. U.S. and European Union officials in recent months have stepped up pressure on Germany to close down the European-Iranian Trade Bank AG—including a Feb. 2 letter from 11 U.S. senators to German Foreign Minister Guido Westerwelle that urged immediate action. Germany has rebuffed such appeals, arguing that it has no proof of illegal activity. In February, it also blocked a French proposal presented in Brussels to designate EIH for EU sanctions, two diplomats familiar with the meetings say. In a statement, EIH says its activities are legal and that it continues to operate under a German license. In a response to the U.S. senators last month, Mr. Westerwelle said the bank operates under strict German oversight, a person familiar with the letter said. German officials familiar with the EU discussions of sanctions say a key reason Germany has been reluctant to support efforts to crack down on EIH is the important role it plays in the business of legions of the country's mid-size, or Mittelstand, companies with Iran. These companies fuel much of Germany's export-driven economy and supply the bulk of its jobs. In Berlin, that's made the Mittelstand a powerful voice in lobbying against taking measures against EIH, government officials say. Lobbyists have argued the companies' Iranian business doesn't fall afoul of United Nations or EU sanctions—which focus on proliferation of weapons and a short list of industries including shipping and development of new energy reserves. They add that the bank provides a secure conduit for transactions with Iranian trading partners. ""EIH is a confidence builder"" for German businesses that have legitimate business with Iran and might otherwise decide against trading, one German official said. Among dealings that are legal are sales of humanitarian goods, medical equipment and machinery that doesn't have military use. (Source: The WSJ)