Germany and Iran after the National Intelligence Estimate

I was reminded of that joke as I spent several days in Berlin last November, talking with German officials about their country’s support for economic sanctions against Iran as a means of thwarting Tehran’s suspected nuclear weapons programme.This is because the official German line on the issue essentially amounted to something like this:“We are sanctioning Iran, we really are! And besides, sanctions only hurt the wrong people and never work anyway.”

My analogy, I admit, is a bit unfair, as Germany is in fact already sanctioning Iran. New German export credit guarantees to Iran have fallen from $3.3 billion in 2004 to $1.2 billion in 2006, while German exports to Iran fell by 18 percent in the first half of 2007. And under American pressure, big German banks – such as Deutsche Bank – have now practically stopped doing business with Iran.

Yet it was also clear from these discussions that Germany remains highly reluctant to increase economic pressure on Iran. And that reluctance will no doubt only increase following a December 2007 US National Intelligence Estimate stating that Iran may have suspended the military aspects of its nuclear programme.

German diplomats argue that tightening sanctions on Iran will lead to greater tensions and make the country even more determined to develop nuclear weapons for its defence. They argue that sanctions outside of the UN would be particularly ineffective, as Russian and Chinese firms would simply step in where European ones stepped out. Berlin acknowledges that pressure must be kept on Iran and says it is prepared to join the US and EU in imposing sanctions if China and Russia ultimately prove unwilling to do so at the UN. But it is hardly anxious to act, not least due to its $5.7 billion worth of exports to Iran (compared to less than $1 billion for Britain and $2.6 billion for France) and its exposure to more than $5 billion of export credit guarantees.

Germany’s schizophrenia on Iran is understandable. Economic sanctions are not a good policy – they are just probably better than the main alternatives (acquiescing to an Iranian bomb, or bombing Iran’s nuclear sites). At a minimum, a cutback in international trade with and investment in Iran would send a message that there is some price to be paid for defying UN Security Council resolutions that call on Iran to end nuclear enrichment and clarify its past illicit nuclear work. As my German counterparts acknowledged, if Iran manages to acquire a nuclear weapon without cost, our warnings to other countries will be hollow, with potentially grave consequences for the nuclear non-proliferation regime and security in the Middle East.

A few days in Berlin also allowed me to get a sense of the great interest with which Germans are following the American presidential election campaign. It was encouraging to see such enthusiasm for a vote that is still almost a year away, but also a bit worrying to witness the depth of two German assumptions: that a Democrat will win; and that this will restore transatlantic relations to the “pre-Bush norm”. I’m reasonably confident the first assumption is right but I would not bet the mortgage on it yet. Keep in mind that the outcomes of the last two American elections were still far from clear hours after polls had closed, so the idea that we can confidently call that outcome a year in advance – in a country that is still deeply divided – is absurd. It’s hard at this point to know even what the main issues will be.

As for the second assumption, it is also probably right but similarly should not be overstated. Unlike some cynics, I do think the next US president will make important changes that could help restore transatlantic unity. Especially if it is a Democrat, he or she would likely do more on global warming, close the Guantanamo prison, unambiguously ban torture, show more respect to allies, and take positions on social and domestic issues that Europeans would applaud. But this new president would also be expected to demonstrate to Americans that they would get something in return for a more diplomatic approach and willingness to compromise. Otherwise I fear the transatlantic honeymoon could be brief, and Congressional and public pressure on the new administration to act more unilaterally would rise. That is another scenario that the German government will have to consider as it decides whether to support US efforts on Iran.