Michael Tockuss: ”The prospects of the economic relations between Europe and Iran look woefully”

Michael Tockuss: ”The prospects of the economic relations between Europe and Iran look woefully”

The US under the leadership of President Donald Trump took an extremely tough stance against Iran. The Republican administration, literally following George Bush’s motto "whoever is not with us is against us", actually has thrown the rest of the world into a dilemma: either to stop any trade and economic ties with Iran or forget about the US market and suffer from the US sanctions along with Iranians.

Washington's return to the policy of total economic sanctions against Iran, the first package of which came into force a few days ago, has become a painful blow to the European Union and, in particular, Germany. Germany had great hopes and tangible prospects to gain a foothold as a leading player in the Iranian market and became one of the first countries after the concluding a nuclear deal with the Islamic Republic, which sent a large economic delegation headed by the Minister of Economy. Today, official Berlin supports the continuation of every possible business with Iran, though in name only. Chairman of Iran-Germany Chamber of Commerce, Michael Tockuss spoke with Dlf about the problems that German business entrepreneurs are currently facing in Iran. According to Tockuss, German business does not feel the real support of its state, which behaves ‘helplessly’. All measures voiced by Germany and the EU are not enough, and the prospects for the economic relations between Europe and Iran look woefully in the current conditions. Vestnik Kavkaza offers our readers the translation of the interview with Michael Tockuss.

-Can we blame German companies that they prefer to trade with the US rather than with Iran?

- I think this alternative is wrong. We observe that large enterprises, for example, Mercedes, freeze business activity in Iran. These enterprises that have branches in the United States, there are even the public joint-stock companies. These are the enterprises that we will lose. On the other hand, there is a large number of medium-sized businesses that we have been advising for months and we know that they will continue to export to Iran.

-But they will also face possible threats from the US?

- In theory, yes. The question is how large this effect will be. In Germany, there are between 5,000 and 7,000 companies that have regular trade relations with Iran. And we have the similar work experience during 2012-2015. Then there were the UN, US and EU sanctions in effect. At that time, the middle-size enterprises preserved the German-Iranian trade relations. Then we exported goods and services worth 2 billion euros. About a third of Germany's exports to Iran comprises of machines and equipment. And this part of exports is often provided by the middle-level enterprises.

- So, you do not expect a serious reduction in the trade turnover due to the US sanctions against Iran, do you?

- We do not expect a serious decrease. Trade itself is not something that worries us. We are disappointed that all projects and further development of the economic ties, cooperation with Iranian enterprises - all this will definitely not be continued and developed.

- What is necessary to continue the cooperation?

- The cooperation could be continued if the government of Germany does not behave as helplessly as it does now. For many days, the Iranian issue has been discussed in the media. But I do not hear statements on this subject from our Minister of Economy or the Minister of Foreign Affairs. A clear, concrete statement by the government on this topic would be a big support. Enterprises are waiting for the solution of structural problems that would allow companies to maintain their business ties with Iran. First of all, it concerns the issue of financing the deals. At the moment, there is no problem with receiving money from Iranian companies in Europe. They are transferred with the help of Iranian banks operating in Europe. The problem is that many German banks are going backward and are not ready to accept this money. At the moment, this is the main problem faced by the entrepreneurs who want to keep business with Iran.

- But these are the private banks. What can politicians do in this situation?

- We are talking about private banks, but there are also partially public legal institutions, and some solutions have been proposed here. For example, there was an idea to attract the European Investment Bank to finance the deals. Another way would be to pay through the German Federal Bank. This was discussed in detail in the past but has not been implemented. The political statements that we want to support Iran and maintain the economic ties with the country are, of course, wonderful. But in fact, at the moment, these statements have no practical results for the companies.

- Is Iran a trading partner that you can rely on?

-Iran has been an extremely reliable trading partner for centuries.

- Even under the current regime?

-Even under the current regime. We do not face delays or non-payments, and we can count on our agreements with Iranians. The economy plays a stabilizing role, the function of the unifying bridge - especially when the political situation is complicated.

- You mentioned the difficulties with banks. But if you were the director of an international bank, would you finance such deals, realizing that you will face problems with the US because of this?

- I understand the global institutions that before the speech of President Trump on May 8 this year had not supported business with Iran. But we have 1100 independent people's banks and 480 more savings banks. And it would be strange if we could not attract at least some of them for financing deals with Iran. Though exactly this happens. The negotiations are held between banks on this issue, and politicians do not support these negotiations.

- You criticize this development. But the Ministry of Economics of Germany said that it will continue to give guarantees for export and investment transactions. Do you consider this an important signal?

- These guarantees have been in force since 2016. But according to the documents at my disposal, so far this mechanism has been used only 20 times. These guarantees only help when you have a bank ready to finance a transaction. And this is the main issue. The problem is not to ensure the risks, but to find a bank that is ready to finance a project in the amount of 20, 30, 40 million euros, for example, in the field of alternative energy in Iran. If I have such a bank, then I can ensure this deal.

- That means the export guarantees without bank support are meaningless?

- It's neither harm nor good. Just like the ‘blocking statute’ of the EU. This is a good political signal, wonderful. But if you look at its details, you will understand that in order to use this mechanism, German companies must prove in court that the deal concluded with the Iranian side was not carried out precisely because of the US sanctions. It is completely unclear how the government is going to pay compensation to the affected enterprises. I can not imagine that the government of Germany will seize the US property in Germany. That is, as you can see, more political statement than practical.

- With the help of this ’blocking statute’ that you have mentioned, the EU wants to ban its state-members from adhering to the American sanctions. You put this mechanism in doubt. What can you recommend German enterprises in this case?

- A lot of German companies are working on this topic since May 8, when Mr. Trump delivered a famous speech. The companies were divided into two large groups. On the one hand, there are large enterprises that have branches in the US and even have the right to sell shares on the US stock exchange. These enterprises must be extremely cautious since the US has a direct influence on them. The second group of enterprises, much more numerous, at best supports only the trade relations with the American market. These enterprises formed the backbone of the German-Iranian economic relations in the past, continuing to support them in similar situations in the past - even during the period of sanctions.


Vestnik Kavkaza

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