Iran-Germany Trade to Reach €5bn in 2017
Industrial giant Siemens AG and automaker Daimler will be among the
first German firms to benefit from opportunities in Iran, but they
are proceeding carefully and only after legal reviews.
“There’s a very large interest from the German side,” Gridl
said. “All the German federal states have already sent
delegations separate from this trip happening now.”
German firms have signed 10 business agreements with Iranian partners during
the fifth session of Iran-Germany Economic Commission in Tehran early in
German Vice Chancellor and Economy Minister Sigmar Gabriel and his Iranian
counterpart Ali Tayyebnia attended the session.
Several German Mittelstand firms, the small- to medium-sized companies that
form the backbone of the economy, had signed deals with Iranian partners,
including SMS group, a builder of steelmaking plants and INTRA industrial
Mitsubishi Germany signed a contract to modernize a gas-fired plant, while
plant constructor Keller HCW wants to build a brickyard in Iran.
Both countries’ central banks have also agreed to a technical cooperation
deal. There was no detail on the size of the agreed deals.
Industrial giant Siemens AG and automaker Daimler will be among the first
German firms to benefit from opportunities in Iran, but they are proceeding
carefully and only after legal reviews.
The German banking sector has been reluctant to underwrite business deals
for fear of falling foul of remaining US sanctions imposed on Iran over
Reminder to US
Speaking at the opening of a 2-day economic forum at Iran Chamber of
Commerce, Industries, Mines and Agriculture headquarters in Tehran (Oct. 3),
Gabriel said Germany wanted to “remind the United States of the commitment
to get to an effective dismantling of sanctions”.
“Germany wants to help Iran push ahead with reforms,” he said, adding that
he believed the Islamic Republic was a reliable credit partner.
“Our aim is to support the current government with its path to opening up to
Meanwhile, head of ICCIMA, Gholamhossein Shafei said Iranians have always
thought highly of German people. He added that his country is after improved
economic, cultural and technologic relations with the European country.
As many as 37 business representatives from prominent German companies,
including Siemens AG and Volkswagen, accompanied the minister on the flight
to Iran and more joined him once the plane landed in Tehran.
The purpose of the trip was to “position the German economy one year on from
the nuclear agreement”, said Rudolf Gridl, who specializes in the Middle
East and North Africa at the Economy Ministry. “We are very confident that
contracts or letters of intent will be signed.”
Germany’s relations with Iran have changed dramatically in the past year.
After years of Iran’s economic sanctions, negotiations between Iran and the
five permanent members of the UN Security Council (Russia, China, the United
States, France and Britain) plus Germany succeeded in a wide-reaching easing
of sanctions in return for the country’s pledge to scale back its nuclear
program and submit to international inspections.
Once the agreement was reached, Gabriel became the first EU minister to
visit Iran and other German politicians have been quick to revive the
previously good relations between the two countries.
“There’s a very large interest from the German side,” Gridl said. “All the
German federal states have already sent delegations separate from this trip
The main lingering problem is that the United States has only partly relaxed
its sanctions. Iran can export oil and gas again, as well as access
long-frozen assets, but a US embargo remains in place. That makes
international banks and business, including some in Germany and France,
hesitant to invest in Iran.
A dozen years of sanctions have resulted in Iran’s banks lagging behind
“The federal government tries to provide Iran technical help with regard to
bringing its banking sector up to speed,” Gridl said.
There are high expectations, especially in the power, transport and health
care industries. Many of Iran’s hospitals are dilapidated and require
Managing Director of Iran-Germany Chamber of Industry and Commerce Rene
Harum said trade between the two countries is expected to reach €5 billion
in 2017 and €10 billion in the coming years.
Speaking at the first meeting of the joint chamber in Tehran late in
September, Harum said bilateral trade stood at €2.5 billion in 2015.
He said Germany is willing to become Iran’s top trading partner, replacing
China whose trade with Iran topped $22 billion in the last Iranian year
According to the Islamic Republic of Iran Customs Administration, trade
between Iran and Germany stood at $2.13 billion in the last Iranian year,
down 25% over the previous year.
IRICA’s latest stats show bilateral trade is already witnessing a rebound.
Iran exported 10,400 tons of non-oil goods, worth $87 million to Germany in
the first four months of the current Iranian year (started March 20),
registering a %1.4 increase compared with last year’s corresponding period.
Pistachios, carpet, caviar, saffron and dates were among the main exports.
More than 419,000 tons of goods valued at $671.3 million were imported from
the European country during the same four-month period, indicating an 18%
rise year-on-year. Imports mainly included industrial machinery, grain,
pharmaceuticals and steel products.
Gabriel’s visit, the second in 14 months, came as almost all Western
countries step up efforts to re-establish trade ties with Iran after the
nuclear deal signed on 14 July 2015. The deal, which obliges Iran to
restrict its nuclear program, has led to removal of most international
sanctions imposed amid fears that Tehran was planning to build atomic
However, remaining US sanctions and political concerns have so far put a
dampener on Iran’s economic recovery, with European banks reluctant to
provide loans as long as any sanctions remain in place.
Nonetheless, figures provided by the German Chambers of Industry and
Commerce show that trade between Germany and Iran reached a volume of 1.5
billion euros ($1.69 billion) between January and July 2016. This represents
an increase of 8 percent over the previous year, but is less than was hoped
The chamber expects exports to Iran to increase to 5 billion euros in the
short-term and possibly double that figure in the long-term.
Germany has commercial and cultural ties with the Islamic Republic going
back to the 19th century.
The visit to Iran was a positive step on the road to expanding economic
relations after years of sanctions, business representatives said.
After years of tough international sanctions it will take time to rebuild
momentum in the relationship, Eric Schweitzer, President of the German
Chambers of Commerce and Industry said. “Now some trust must be rebuilt,” he
said, adding that Gabriel’s trip no doubt was helpful in achieving that
Reinhold Festge, president of the German machine builders association VDMA,
told Reuters that he came away with a positive impression after meeting with
“In this respect, after this trip I am a little more reassured,” he said.
“We have earned billions from oil exports, with which we could do some good
business with the Germans,” Iranian Oil Minister Bijan Namdar Zangeneh told
the DPA news agency, saying that problems with bank transactions had slowed
this process. “That is bad for us and also bad for Germany,” he said.
Gabriel said that despite existing financing problems, “German industry is
very interested” in the rebuilding of economic relations and “so too are the
Iran to Open Private Banks in Germany to Boost Trade Ties
At least two private Iranian banks will open branches in Munich. Germany has
been looking to boost exports to Iran since nuclear program-related
sanctions were lifted on Tehran last year.
Iran’s Middle East Bank and Sina Bank will open branches in the Bavarian
city of Munich by the end of the year, Central Bank of Iran said, a
development that could help boost German exports to the Islamic Republic.
Despite the lifting of international sanctions after implementation of last
year’s nuclear deal, major European banks have refrained from working with
Iran due to concern over US non-nuclear related sanctions. Iran has accused
the United States of blocking the country’s economic integration with the
Lack of financing has upset the potential for major trade deals between Iran
Ilse Aigner, Bavaria’s economy minister told the “Münchner Merkur” newspaper
(Oct. 2) that the new Iranian bank branches would help German businesses
realize greater exports to Iran.
“Business ties between Bavarian companies and Iran often fail today because
of barriers in the payment process,” said Aigner, who was on her second trip
to Iran this year to boost trade ties.
“That is why having branches of Iranian banks in Munich is particularly
important for our businesses. Especially our small and medium-sized firms
have enormous export prospects to Iran that they will be able to utilize
more easily in the future,” she said.
Aigner pointed to German engineering, automotive, aerospace, environmental
technology, pharmaceutical and medical technology companies as having an
interest in exporting to Iran. She also said three banks would open in
Munich, although the CBI confirmed only two.
Iran is also in talks with the German central bank and other banks to settle
oil exports in euros instead of dollars.
Siemens said it will supply components for 50 diesel-electric locomotives to
Iran. It did not disclose the value of the contract, but based on comparable
deals, it could be in the low hundreds of millions of euros.
Germany was for decades a major trading partner of Tehran before the
sanctions allowed China and several other nations to overtake it.
German exports to Iran jumped 15 percent in the first half of the year to
1.13 billion euros and could reach 4 billion euros in the full year, said
Michael Tockuss, head of the Hamburg-based German-Iranian Chamber of
Siemens, MAPNA Sign Iranian Locomotive Contract
Siemens is to supply MAPNA with components for the assembly of 50 Safir
diesel-electric locomotives at its factory in Karaj.
Siemens has signed a contract to support the modernization of the rail
network and supply local industrial group MAPNA with components for the
assembly of 50 Safir diesel-electric locomotives at its factory in Karaj.
The contract was signed on October 3 during an official visit to Iran by
Germany’s Vice-Chancellor and Minister for Economic Affairs & Energy Sigmar
Gabriel. It follows Siemens’ signing of a memorandum of understanding for
cooperation with the Islamic Republic of Iran Railways on January 6.
‘As Iran seeks to modernize its railway infrastructure, Siemens is proud to
support these ambitions’, said Siemens management board member Siegfried
Russwurm. ‘We are pleased to work with our partners at RAI and MAPNA Group
and look forward to contributing to the country’s sustainable economic
development, of which rail is a key component.’
In 2008 Siemens and MAPNA signed a technology transfer agreement covering
the production of 150 ER24PC IranRunner diesel locomotives, the first 30 of
which were delivered from Germany.
Germany Eyeing €3bn Investment in Iran
Iran said (Oct. 2) Germany is preparing to implement an action plan to
invest €3 billion in different industries of the Islamic Republic.
Ali Majedi, Iran’s Ambassador to Germany, said the investments will be made
through a consortium comprising six German banks.
Majedi emphasized that the related agreements for this will be signed during
the visit to Tehran by the German Vice Chancellor and Economy Minister
He added that Iran and Germany have over the past months devised fast track
economic cooperation plans and that those plans include the development of
power plants and generation of electricity.
A recent agreement that Germany’s Siemens signed with Iran’s MAPNA Group to
transfer the technology of gas-powered turbines is an example of such plans,
the Iranian envoy said.
Others, he added, concern producing electric and diesel locomotives as well
as train cars and providing the signaling systems for Tehran-Isfahan - and
probably Tehran-Mashhad – tracks.
Majedi further emphasized that Germany’s Volkswagen plans to transfer the
technology to Iran to produce two of its models – what he said will be part
of the same fast track plans devised by the two countries.
Germany used to be close trade partners but bilateral business dropped as a
result of sanctions, declining to €2.4 billion ($2.6 billion) last year from
around €8 billion in 2003-4, according to German figures.