Magazine article USA TODAY

Taking Care of Business: "If Great Britain and the EU Fail to Put Prompt and Massive Pressure on Iran and Confront It with the Alternative of Either Changing Course or Suffering Devastating Economic Blows, All That Will Remain Will Be the Choice between a Bad Solution (the Military Option) and a Dreadful One (the Iranian Bomb)."

Magazine article USA TODAY

Taking Care of Business: "If Great Britain and the EU Fail to Put Prompt and Massive Pressure on Iran and Confront It with the Alternative of Either Changing Course or Suffering Devastating Economic Blows, All That Will Remain Will Be the Choice between a Bad Solution (the Military Option) and a Dreadful One (the Iranian Bomb)."

Article excerpt

WE STAND AT A historic crossroads. Disregarding UN Security Council decisions, Iran's rulers are stepping up their nuclear program. Will Europe continue soft-soaping the mullahs or will it show some resolve? Will it accept the fact that, by seeking nuclear weapons, the Iranian dictatorship is escalating its holy war at the gates of Europe, or will it summon up the will to raise the economic price Iran must pay to a point where the regime--which is facing mounting popular discontent--has to give way?

If any power is still able to get the regime in Tehran to back off without the use of military force, then that power is the European Union. The U.S. cannot do it because it has no trade with Iran. China, Japan, and Russia cannot help either, as Iran can get along without them. Iran, however, needs Europe. Iran gets 40% of its imports from the EU, which in turn takes in 25% of Iranian exports. While Japan and China are interested in Iran essentially as a source of energy supplies, Germany, Britain, Italy, the Netherlands, and France provide the Iranian economy with vital investments. Trading partner number one was--and is--Germany.

As the former president of the German-Iranian Chamber of Commerce in Tehran, Michael Tockuss, points out, "Some two-thirds of Iranian industry relies on German engineering products. The Iranians are certainly dependent on German spare parts and suppliers." Underline "certainly dependent." The potential leverage of economic sanctions could not be clearer. A study by the Iranian Parliament has stated the obvious: without European spare parts and industrial goods, the Iranian economy would grind to a halt within a few months. If anyone still is in a position to use this lever before it is too late, it is Germany and the EU.

Of course, Europe should have done so back in 2003, when Tehran was forced to admit that it had been pursuing a secret nuclear program for the past 18 years. The thought of nuclear weapons in the hands of the world's number-one sponsor of terrorism certainly has alarmed the public--but what happened? Instead of cutting technology transfers to Iran immediately, European exports to Iran rose 29% to 12,900,000,000 between 2003-05. Prior to 2003, government-backed export guarantees had fueled the expansion in trade by countries such as Italy, France, and Austria. After the exposure of Iran's secret nuclear program, these export guarantees were not stopped by European governments, but generously increased, as we can see here in the case of Germany and Britain.

In its 2004 annual report on export guarantees, Berlin's Economics Ministry dedicated a special section to Iran that captures its giddy excitement about business with Tehran: "Federal Government export credit guarantees played a crucial role for German exports to Iran; the volume of coverage of Iranian buyers rose by a factor of almost 3.5 to some 2,300,000,000 compared to the previous year. The Federal Government thus insured something like 65% of total German exports to the country. Iran lies second in the league of countries with the highest coverage in 2004, hot on the heels of China."

British trade with Iran is relatively small in comparison to Germany. Between 2003-05, Germany's exports to Iran were about five times larger than exports from British firms. The governmental policies of both countries, however, are quite similar. In Britain, there is a separate government division, the Export Credits Guarantee Department (ECGD), that reports to the Secretary of State for Trade and Industry and derives its powers from the Export and Investment Guarantees Act of 1991. British export credit guarantees for business with Iran rose by a factor of 2.6--from 30,000,000 [pounds sterling] to 77,000,000 [pounds sterling] in 2004.

Is this boosting of business with Iran compatible with the ECGD's declared goal "to ensure its activities with other Government objectives including those on sustainable development, human rights, good governance and trade"? …

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