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Act quickly

Hans Spross / gdJuly 21, 2015

The Iranian nuclear deal will allow Germany to quadruple its exports to Iran in the next four years. Daniel Bernbeck, a German business representative in Tehran, discusses the opportunities of the deal in a DW interview.

German Economy and Energy Minister Sigmar Gabriel (L) speaks alongside Iranian Oil Minister Bijan Namdar Zanganeh during a press conference in Tehran on July 20, 2015 (Photo: ATTA KENARE/AFP/Getty Images)
Image: Getty Images/AFP/A. Kenare

DW: The nuclear deal between Iran and the world powers is still fresh but we see that German Vice-Chancellor and Minister for Economy and Energy, Sigmar Gabriel, is already in Tehran with a business delegation. Is Germany not acting in haste?

Bernbeck: I don't think that what is happening right now should be viewed as acting hastily. The German companies have followed the EU rules to the letter and did not interfere while the nuclear talks were taking place. No business or government delegation went to Iran during this time; at the most there were some visits from the German Chamber of Commerce.

While other countries were quite active during the negotiations, German companies, in contrast, remained very cautious and observed the developments from the outside. But as soon as the deal was signed, we did not wait and acted rather quickly.

The German minister's visit is still not related to trade. It is a fact-finding mission - a symbolic journey to demonstrate that the success of the negotiations is not merely restricted to papers but has practical implications.

Daniel Bernbeck
Bernbeck: 'Iran must maintain relations with supplier countries'Image: AHK

Which sectors will benefit most from the lifting of sanctions?

The old trade relations between Germany and Iran will be revived. These are mainly related to mechanical engineering and parts deliveries for the car industry. To some extent it will also include raw materials for the chemical and pharmaceutical industry and medical technology. The printing industry will also benefit from the lifting of the sanctions. But the mechanical and plant engineering will be the focus of the new ties. These sectors have been hit hardest by the sanctions and will also benefit the most from the agreement.

What must happen now so that Iran can reset its economic relations with Germany?

It is important to point out in this regard that most of Germany's export potential was not directly affected by the sanctions, but rather restricted by extra-judicial entrepreneurial and political decisions. For instance, banks sometimes refused to transfer money to Iran. This wasn't because the products destined for that country were actually banned. It was rather the fear of potential retaliation by the United States that drove the banks to reject Iran-related money transfers, regardless of the aim and beneficiary.

This is why the main task ahead is to re-establish normal banking relations and possibilities to transfer money and other enable financial tools such as letters of credit and bail. Ultimately, you will have consortium banks which pool their resources to finance several billion-dollar projects. However, this is likely to take one or two more years before it is firmly established.

What can and must Iran do to reap the benefits of its economic opening to the West?

Iran's economy largely depends on the revenues generated from its export of oil, gas and petrochemicals which, among other things, enables them to get their hands on foreign currency. But lower oil prices would be a dilemma for the country - should it return to the international market - given that it in order to reach previous earning levels, Iran would have to sell twice as much crude oil as it did when the barrel price was at $100 (92 euros) or above.

But Iran could tackle this by not only boosting oil exports, but also expanding exploration, and modernizing as well as establishing new refineries. At the same time, the country wants to free itself from its dependency on exporting raw materials and it can do so by increasingly focusing on processing and selling products.

However, all this needs to be financed. Investing in petrochemicals is a pricy business, especially if you have to buy the necessary equipment from the West, given that the Iranians don't get the quality they want from the Chinese. So the problem can be solved by taking bold steps and maintaining good ties with countries like Germany.

What is set to happen now following the "symbolic" trip of the German delegation?

Iranians are of the view that there will be no return to the sanctions - a development which lays the foundation for future investments. In this regard, we expect to see a clear surge in exports from Germany. Trade happens fast and shippers cannot complain at the moment about the number of orders from Iran - a situation expected to continue for the next two years.

Daniel Bernbeck is Managing Director of the German-Iranian Chamber of Industry and Commerce.