(Time to close the gap? Gabriel speaking to Iran's Oil Minister Bijan Zanganeh during his July visit to Iran.)

Heading a large trade delegation, Germany's Vice Chancellor and Minister for Economic Affairs and Energy Sigmar Gabriel arrived in Tehran on Sunday, October 2, for a two day visit hoping to give a timely uplift to the post-sanctions German-Iran relations. But, a German newspaper, Die Welt, has called it a “mission impossible” in light of the existing US sanctions that deter the German banks and other corporations from engaging with Iran.

“The German banks are still restrained, and the issue of funding is therefore unfortunately still unresolved. This is a lengthy process and that this leads to disillusionment," Rene Harun the head of German-Iranian Chamber of Industry and Commerce has told the press. This does not mean, however, that the situation is completely hopeless. Last month, Ilse Agner, the minister for the economic affairs of Bavaria was in Tehran and inked an agreement for three Iranian banks to open branches in Munich.

While Germany’s two biggest banks, Commerzbank AG and Deutsche Bank AG, continue to avoid doing business with Iran, smaller banks such as the Europaeische-Iranische Handelsbank AG in Hamburg offer letters of credit, thus expediting business transactions between Iranian and German firms. According to Mohammad Khazaee, head of Iran Investment Organization, Iran's cooperation with Germany's Hermes Insurance Company is estimated to surpass 7 billion Euros, Already, there has been a 15 percent increase in German exports to Iran this year and, optimistically speaking, the trade volume could soon reach as high as 4 billion Euros.

The German trade delegation includes both large, medium, and small companies, seeking a share of the Iranian market opened up by the nuclear agreement, which went into effect nearly 9 months ago. So far, Germany has lagged behind France, Italy, China, and Korea, in terms of taking advantage of the new Iran business environment, and, indeed, it may be impossible for Germany at this point to regain its privileged past status as Iran’s number one trade partner; since 2012, Germany’s trade with Iran has suffered due to the nuclear-related sanctions and it would take a rather herculean effort by the German government to normalize trade and non-trade relations with Iran, in light of the acidic combination of both US sanctions-related inhibitions and a host of political obstacles – pertaining to Israel, Syria, and human rights.

Nevertheless, the prospects for the easing of restrictions on German-Iran trade appear to be bright and the German giants such as Siemens, Daimler, Volkswagern and a number of energy, environmental, and petrochemical companies have seemingly set aside their hesitations in favor of new (joint) investments in Iran.

Minister Gabriel’s trip, even if mildly successful, may even pave the way for an official German visit by Iran’s President Hassan Rouhani, assuming that Tehran and Berlin can make some headway in smoothing their differences on human rights and the conflict in Syria. Concerning the latter, Germany’s recent call for a no-fly zone in Syria is unacceptable to Tehran, which has recently doubled its effort to help Damascus regain control of Aleppo, much to the chagrin of US and its allies, who dread the thought of Bashar al-Assad’s control of all main urban centers in war-torn Syria.

But, this is first and foremost an economy-oriented visit and Germany and Iran can well expand their trade relations despite lingering geopolitical differences. Without doubt, Gabriel’s Tehran hosts will seize the opportunity to remind their guest of Iran’s commitment against ISIS terrorism and the values of closer Iran-German (intelligence) cooperation against terrorism.

On the whole, then, the cynicism of the German newspaper cited above may be exaggerated and the logic of German capitalism will likely dictate a timely breakthrough in Iran-German ties that is entirely in the realm of realistic possibilities.





This article was written by Kaveh L. Afrasiabi for Iranian Diplomacy on Oct. 3, 2016.