DeMediacratic Nation: IAEA

An article at Realite EU, reprinted from The Financial Times (8/16/07) points to some of the basics of what Iran is and is not doing. Sadly, it all becomes possible due to time; time that time and again is given to Iran for its weapons grade enrichment of uranium.

Hey, it's only for peace, with peaceful intentions...won't you give us time to prove this? Need more time? Peter Zimmerman, Realite EU:

"Iran has stalled and teased and played the European Union three of Britain, France and Germany as an expert fisherman might handle the big one. For more than 18 years Iran violated its safeguards agreement with the Inter-national Atomic Energy Agency, in effect violating the Non-Proliferation Treaty, by conducting clandestine enrichment research and experiments without declaring them to inspectors.
Then Iran began the process of learning to enrich uranium in earnest and on an industrial scale. All the while it held out the prospect that it might suspend its activities if only the right concessions were made. Iran needed time to advance its nuclear weapons programme and, by buying into intermin¬able negotiations, we gave it.

We are still giving Iran time. Late in June Ali Larijani, Iran’s chief negotiator, and Mohamed ElBaradei, the IAEA director-general, agreed to work out a “plan of action” within two months on resolving IAEA questions about Tehran’s contested atomic programme. A team of IAEA inspectors has just returned from a mission to see Iran’s heavy water reactor construction site.

This may sound like more of an advance than it is, as Iran’s safeguards agreement mandates such inspections. At the same time Iran is claiming an “inalienable right” to enjoy the benefits of nuclear technology under the terms of the NPT, because its programmes were exclusively for “peaceful purposes”. It does not, in fact, enjoy that right because it is engaged in a programme which violates critical parts of its safeguards agreement and which appears to be intended to make nuclear weapons. Nuclear safeguards are not a menu from which a nation can choose which parts it will follow and which it will not.

Ordinary uranium contains 0.7 per cent of the only isotope that matters, U-235, the one that fuels nuclear bombs. Most of the remaining 99.3 per cent is U-238, which is not usable on its own in atomic weapons. The process of “enrichment” is really one of concentration, in which the U-238 is progressively filtered out using centrifuges. When the concentration of U-235 reaches 90 per cent or more, the mater¬ial is often termed “weapons grade”, and very efficient bombs and warheads can be made.

Many thousands of centrifuges are needed to process industrial quantities to highly enriched uranium. The west and the IAEA thought this was a target that would take Iran a long time to hit. But we now know that the Iran¬ians have 10 centrifuge cascades, totalling 1,640 machines. However, Iran claims to have assembled at least 3,000 centrifuges, enough to make another nine or 10 cascades. As the centrifuges now operating are configured, Iran is making 4 per cent U-235, suit¬able for use in a power reactor: 3,000 centrifuges will produce U-235 for one bomb each year.

It is now obvious that Iran skilfully played for time until they reached a rather high level of technical mastery of the enrichment process. This is the price paid by the west and the Russians and Chinese for their reluctance to apply meaningful sanctions to Iran two and even three years ago.

Even if Iran abandons its plans to build more than the current 3,000 centrifuges, another problem remains. Part of any negotiation will have to be an iron-clad guarantee that supplies of fuel for Iranian nuclear power reactors will be available, no matter what political winds blow. In practice that will almost certainly mean that Iran will be allowed to hold at least a year’s spare fresh fuel as a buffer. The danger here is that reactor fuel, enriched to 4 per cent U-235, is already more than halfway to bomb grade because enrichment becomes easier as concentration of U-235 increases. If Iran decides to throw out international inspectors and abandon the NPT, the capabilities of its “pilot plant” will be more than doubled if it taps into its stock of reactor fuel.

American hawks and neocons are reputedly putting pressure on the Bush administration to talk tougher and to plan military strikes. While the military option must remain on the horizon, it would be an error to make the threat explicit right now. The advances in Iran’s nuclear programme mean that vigorous diplomacy backed by credible sanctions must aim at removing the completed centrifuges. This will buy some time, and sometimes delay is equivalent to denial, especially if it allows time for the Islamic Republic to abandon its nuclear programme and its hostility to its neighbours."

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If you're interested in continued business and care very little for or even recognize the threat from the Islamic Republic of Iran, be sure to visit:

"BERLIN - A conference entitled "Iran - Business Opportunities for German Exporters" is opening tomorrow in Darmstadt, Germany, under the auspices of the Hessian state government and an initiative of the Federal Ministry of Economics and Technology, and to the chagrin of Israeli diplomats, who have accused Berlin of sending a message of "business as usual" to the regime in Tehran."

Today from Berlin chief government spokesman Ulrich Wilhelm said:

"We are adhering to efforts for a negotiated diplomatic solution, all other options are not presently at disposition."

The question will likely remain; would serious and invasive economic sanctions deter negative moves on the part of Iran with regard to its nuclear ambitions? We'll probably never know, however, were Iran's number one trading partner play along, adherence to "efforts for a negotiated diplomatic solution" might be less of a fiasco than it already is.

Fact Sheet

German Chancellor Angela Merkel said in February 2006, “We must take the Iranian president’s rhetoric seriously.” ¹ Similarly, Germany’s Minister of Foreign Affairs Dr. Frank-Walter Steinmeier has more than once declared his support for diplomatic and economic sanctions against Iran. ²

Nevertheless, German companies have continued to invest billions of Euros in Iran over the past decade, and the German government supports those investments through public subsidies.

Germany’s overall investment in Iran:

Germany is Iran’s number one trading partner, providing vital investments for Iran’s economy.
“Some two thirds of Iranian industry relies on German engineering products,” said Michael Tockuss, former President of the German-Iranian Chamber of Commerce in Tehran. “The Iranians are certainly dependent on German spare parts and suppliers.” ³
2005, export guarantees were reduced by more than 36.8 percent to around 1.4 billion Euro. The German government's compensation for the risk of trade with Iran was 5.8 billion Euro. ⁴
The German Engineering Federation (VDMA) stressed how its business with Iran has grown: “In the year 2005, the German machine construction made exports to Iran worth € 1.5 billion; in 2006, the business was even more lucrative.” ⁵
Five thousand German companies do business with Iran, a third of which have a representative or a mission in Iran. Of these companies 1,750 are registered as members of the German-Iranian Chamber of Commerce in Tehran.
Many firms want to do business in Iran, albeit increasingly in secret to avoid public awareness of their partnership with the regime. They include giants such as BASF, Henkel, Continental, Bahlsen, Krupp, Linde, Lurgi, Siemens, ZF Friedrichshafen, Mercedes, Volkswagen, MAN, Hansa, Hoechst, and smaller firms such as Stahlbau Schauenberg, Schernier, and Wolf Thermo-Module.
“German companies are trying now, as much as possible, not to publish their contracts with Tehran,” the German business paper Handelsblatt wrote in January 2007. “‘Everything that could affect the U.S. market is deadly. Siemens for example, did not comment officially on its locomotives deal. ⁶
July 29, 2007: Deutsche Bank announced, in the future it is not going to keep accounts in Iran. In doing so, it will be following the footsteps of Commerzbank and UBS. ⁷
August 21, 2007: Dresdner Bank has said it plans to pull the plug entirely on "its activities with Iran and in Iran," citing excessive "bureaucratic expenses." The Financial Times Deutschland said Dresdner Bank's 2006 lending in Iran amounted to the low end of the hundreds of millions of Euros, and had fallen to double digits in 2007. ⁸

Examples of major German corporations investing in Iran:

Siemens: On November 14, 2006, Iran’s Power Plant Projects Management Company (Mapna) and Germany's Siemens signed a deal worth € 450 million ($570 million U.S.) to build 150 locomotives for the Iranian railway network, the official news agency IRNA reported. The deal envisages the import of 30 fully built locomotives to Iran in the first phase and construction of 120 more inside Iran over six years. The contract also requires Siemens to transfer the technical know-how to Iran in 10 years. ⁹ Three years earlier, in August 2003, Siemens—a firm with expertise in nuclear power station construction—signed a contract to deliver 24 power stations. To complete the deal, Siemens had to commit itself to “technology transfer with regard to small and medium-sized power stations.” ¹⁰
BASF: BASF Iran has been active since 1959 and represents the entire BASF portfolio, with a special emphasis on strongly growing industries like automotive, petrochemicals (catalysts), and fiber. BASF Iran had a turnover of around € 70 million in 2005. ¹¹

The German government provides subsidies:

In March 2006, the Federal German Foreign Ministry promoted Iran as a partner for German companies: “Even today Iran is one of the most important markets for German companies in the entire Near and Middle East. From January to November 2005 Germany exported goods valued at more than € 4 billion to Iran.” This, the Ministry said, was “evident proof of the agility of the German-Iranian cultural exchange,” in contrast to the fact that “Iran does not maintain diplomatic relations with either the USA or Israel.” ¹²
In its 2004 annual report on export guarantees, Berlin’s Economics Ministry noted: “Federal Government export credit guarantees played a crucial role for German exports to Iran; the volume of coverage of Iranian buyers increased by a factor of almost 3.5 to some 2.3 billion Euros compared to the previous year.” The report continued: “The Federal Government thus insured roughly 65% of total German exports to the country [Iran]. Iran lies second in the league of countries with the highest coverage in 2004, hot on the heels of China.” ¹³
In 2006, the limited coverage coupled with the tense political situation in Iran lead towards a further 40 percent decrease in the volume of coverage to about 900 million Euro (previous year: 1.4 billion Euro). In the second quarter of the year 2006, Schuler SMG GmbH & Co. KG provided Iran with a hydraulic transfer press which included band arrangement for the construction of wheels. Iran's export guarantees were reduced by over 38%. Along with the cuts of short dated commercial transactions, export guarantees were also reduced for intermediate-term and long-dated projects in the sector of petrochemistry and the manufacture of foam plastic. ¹⁴
The German government plans to grant further Hermes export credit guarantees for trade with Iran. In February 2007, Germany’s Minister for the Economy announced that the policy will not be changed just “because of new political obstacles…. Iran-related export credit guarantees are still available.” ¹⁵
European export assurers no longer cover big projects that require funding. Together they placed Iran within the most expensive category, which means an augmentation of charges at 20 percent. Bank credits are, if at all, only being approved at adverse conditions. ¹⁶
In September 2007, iXPOS -an initiative of Germany’s Ministry of Economics- is supporting an event by the International Chamber of Commerce in Darmstadt that promotes business ties between Iran and Germany. Many German companies have had experienced "ups and downs" doing business with Iran, the invitation says, but they still look at it from the following perspective: "Iran is used to crises – somehow it always survives". Iran's economic potential certainly justifies this positive perception, it says in the invitation. ¹⁷

Trade Volume Germany-Iran 2002-06 ¹⁸:

2002	Exports to Iran	EUR 2,234 million (+16%)
	Imports to Iran	EUR 320 million (-21%)
2003	Exports to Iran	EUR 2,678 million (+20%)
	Imports to Iran	EUR 290 million (-9%)
2004	Exports to Iran	EUR 3,574 million (+33%)
	Imports to Iran	EUR 391 million (+35%)
2005	Exports to Iran	EUR 4,429 million (+24%)
	Imports to Iran	EUR 462 million (+18%)
2006	Exports to Iran	EUR 4,110 million (-7%)
	Imports to Iran	EUR 410 million (-10%)