Germany is Iran's second-largest provider of products and exported some 4.4 billion euros ($5.6 billion) of goods — almost all mid- to high-tech industrial and technological products — to Iran in 2006. (Technically, Germany comes in second, but the largest supplier, the United Arab Emirates, actually only transships goods to Iran.) The Iranian-German Chamber of Commerce indicates that three-quarters of Iran's small and medium industries rely on imported goods and technology from Germany, as one of Iran's greatest economic weaknesses is a lack of technological aptitude. Such imports are crucial for the development of sectors as varied as petrochemicals, transport, food processing and manufacturing. This involvement has led Germany to be the European power most resistant to the United States' Iran policy. Under former Chancellor Gerhard Schroeder, this opposition certainly had an ideological bent, but the economic facts of the case have made Chancellor Angela Merkel queasy about giving the Americans a blank check as well. But as the United States and Iran continue to threaten each other as part of their respective national strategies, Berlin has had a change of heart. STRATFOR sources within various EU governments have said that, in the past week, the Germans have essentially flipped. In part, the shift came because the German leadership realizes that recent International Atomic Energy Agency (IAEA) reports indicate that Iran's secrecy about its nuclear program has deepened of late, and that therefore additional sanctions are perhaps justified. Pointed questioning from the British, U.S. and French delegations has forced the IAEA to announce that Iranian cooperation has been severely lacking for nearly two years. But mostly, the shift happened because the constellation of forces in Europe and North America are pushing events in a direction with which Berlin is uncomfortable, necessitating a change in policy.
Under Prime Minister Gordon Brown, the United Kingdom has become far more willing to support punitive sanctions, and perhaps even to nudge the situation toward a military resolution — a shift that has left Germany as the only major European power arguing for a softer line.
Conversations with French President Nicolas Sarkozy pressed home to Merkel that if sanctions were successful, a war could probably be avoided. So while sanctions would interrupt German economic gains, they would certainly be the lesser of two evils. After all, should the Americans go war with Iran, they certainly are not going to stop bombing if they see the "Made in Germany" label on a power plant.
The United States did offer a sweetener. During Merkel's Nov. 9-10 visit to U.S. President George W. Bush's Crawford ranch, Bush — very unofficially — signaled that if the issue of permanent German membership on the U.N. Security Council came to a vote, Berlin could count on an American "aye."
Germany remains firmly opposed to military action, and none of this means that sanctions — much less war — are imminent. That will depend largely on the ebb and flow of U.S.-Iranian negotiations over the future of Iraq. But the shift in the German position re-establishes the Western diplomatic wall on the issue, giving the Iranians one less crack to wedge open.