Germany's New Ostpolitik: Changing Iran

Charles Lane

From Foreign Affairs, November/December 1995

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Summary:  Iran is the one sore spot in an otherwise highly cooperative German-American relationship. The United States has sought to punish the Islamic state for sponsoring terrorism. Germany has tried to maintain a "critical dialogue" of limited diplomacy and commerce, much as its Ostpolitik tried to engage Soviet bloc nations during the Cold War. U.S. officials decry Germany's shady dealings and billions of dollars in loans and credits to Iran. When challenged, German officials charge the United States with hypocrisy. Lurking behind the dispute is an uncomfortable fact: in a world without the Cold War, "rogue states" are not threatening enough to force accord among Western nations.

Charles Lane is a Senior Editor at The New Republic.

TRADING WITH THE ENEMY

German-American friendship has been a pillar of the Western alliance in the post--Cold War era, even when that alliance has been strained over issues ranging from Bosnia to trade liberalization. The U.S. and German governments have worked together on aid to Russia, NATO expansion, nuclear nonproliferation, and Middle East peace. German Chancellor Helmut Kohl and U.S. President Bill Clinton enjoy a natural rapport. But when it comes to dealing with Iran, Germany and America have consistently been at odds. Although the two governments have assured each other that their objectives in southwest Asia are the same--to keep Iran from developing nuclear weapons, supporting terrorism, and disrupting the Arab-Israeli peace process--they differ radically on which means to use. The United States has tried to isolate Iran diplomatically and strangle its economy. Germany--and Europe--favor engagement (what Bonn calls a "critical dialogue") built around a multibillion-dollar trade and investment relationship.

When President Clinton banned U.S. trade with, and investment in, the Islamic Republic in May, he was trying not only to punish the mullahs, but also to undercut the European policy, especially that of Germany. Only three months before, at a joint press conference at the White House, Chancellor Kohl had pointedly claimed that American oil companies did more business with Iran than German ones, and the charge of hypocrisy, leveled frequently by European officials, bothered the Clinton administration. (Until the Clinton embargo was announced, U.S. oil companies and other firms did do a substantial amount of business with Iran, as Kohl charged: in 1994, U.S. companies bought $4.3 billion worth of Iranian oil, all of it for sale in Europe since imports to the United States were banned, and sold the Iranians $300 million worth of other goods.) But even after Clinton's imposition of the embargo, Western Europe and Japan stood pat. "We do not believe that a trade embargo is the appropriate instrument for influencing opinion in Iran and bringing about changes there that are in our interests," said German Economics Minister Günter Rexrodt.

Clinton's tough words notwithstanding, it is the United States, not Germany, that has wound up isolated vis-ŕ-vis most of the world. Germany is Iran's biggest trading partner, according to official U.S. figures, but France, Italy, Belgium, Sweden, Spain, Turkey, and, to a lesser extent, Great Britain all do hundreds of millions of dollars worth of business annually with Iran. Japan has set aside $1.4 billion in development credits for Iran, $350 million of which has already been disbursed for the construction of a hydroelectric dam. Russia and China have both made infamous nuclear deals with the Islamic Republic.

In a sense, the arguments over how to handle Iran are a continuation of a long-standing transatlantic debate about "trading with the enemy." During the Cold War, European governments, Germany's included, tended to be less willing than the United States to use trade embargoes and other forms of economic isolation against the Soviet Union. Diplomatically, they leaned toward détente and constructive engagement. This was ...

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