- The Washington Times - Wednesday, July 14, 2010

Next week, when European foreign ministers meet to codify new sanctions against Iran, the world will be looking to the Islamic republic’s largest trading partner on the continent: Germany.

In the past three weeks, Germany has taken steps to close some Iranian banks operating in the country, according to a senior German government official who spoke with The Washington Times on the condition of anonymity because of the sensitivity of the topic.

Meanwhile, an analysis of Iran’s banking sector by former U.S. Treasury Department analyst Avi Jorisch found that five German banks continue to do business with Iranian entities that are designated by the most recent U.N. Security Council sanctions.

Mr. Jorisch also found that as of June 30, four major Iranian banks sanctioned by the Treasury Department or the U.N. Security Council continued to operate in Germany.

After trying for its first year in office to reach a diplomatic entente with Iran, the Obama administration has switched to a policy aimed at pressuring Tehran’s leaders to abandon its uranium-enrichment and nuclear programs.

The pressure track has several components that stem from U.N. Security Council Resolution 1929, a fourth sanctions resolution against Iran that designates banks, individuals and front companies associated with its nuclear program and support for terrorism.

Last month, President Obama signed legislation that threatens to bar foreign companies from the U.S. economy if they do significant business in Iran.

On July 26, the European Union’s foreign ministers will meet to discuss in detail new sanctions that could limit Iranian shipping lines and the insurance companies that underwrite Iranian exports.

“Concerning the activity of Iranian banks in Germany: Branches and subsidiaries of U.N.- and EU-designated Iranian banks are frozen and not operating,” a senior German government official said in an interview this week.

The official added that, specifically, the Frankfurt branch of Iran’s Bank Sepah is allowed to engage only in “activities related to the closure of its business, i.e. finishing its existing obligations. All the before-mentioned Iranian banks are submitted to strict monitoring; they cannot enter into any new business.”

Bank Sepah has been implicated in both the procurement of nuclear technology and the financing of terrorist organizations, Mr. Jorisch said.

“The closure of Bank Sepah is an important and significant first step,” Mr. Jorisch said. “But German authorities should shut down the designated Iranian branches operating in Germany and German financial institutions should cease providing financial services to designated Iranian banks.”

In addition to Bank Sepah, Mr. Jorisch identified in his recent research Bank Melli and Bank Saderat as having branches in Hamburg and Frankfurt.

Requests for comment from the Frankfurt branch of Bank Sepah went unanswered.

In addition to Iranian banking, Germany’s trade with Iran is big business.

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