Development of Iranian-German Relations in 2010-2020 (Problems and Prospects)

Ibragimov Farkhad Elshan Ogli Postgraduate Student, Department of Integration Processes, Moscow State Institute of International Relations of the Ministry of Foreign Affairs of the Russian Federation 76 Prospekt Vernadskogo str., Moscow, 119454, Russia farxadibragimov@list.ru

Introduction

After the 1979 Islamic Revolution, relations between the two countries were very strained in some areas, and since 2003 they have been defined by concerns about Iran's nuclear program. The Joint Comprehensive Plan of Action (JCPOA) of July 14, 2015 between the P5+Germany countries (the five permanent members of the UN Security Council plus Germany) and Iran created an opportunity for closer bilateral relations and regular political consultations ^[1].  Germany, France, the UK and the EU support the nuclear agreement even after the US withdrawal. Since April 2021, the countries have been negotiating with Russia, China, Iran and the United States on the return of the United States to the JCPOA and the resumption of Iran's commitment to its obligations under the agreement. The German Government continues to monitor the human rights situation in Iran with concern.

Economic relations between Germany and Iran have traditionally been close. About 30 percent of Iran's industrial infrastructure was produced in Germany. However, the withdrawal of the United States from the JCPOA, announced by President Trump on May 8, 2018 and the re-introduction of secondary US sanctions had a serious impact on the economic situation. In 2020, the trade turnover between Germany and Iran fell by 45% compared to 2019 to 1,722 million euros. According to the Federal Statistical Office, the trade turnover between the two countries in 2021 increased slightly again to 1821 million euros. Germany's exports to Iran amounted to 1,546 million euros, and Germany's imports from Iran amounted to about 275 million euros. Thus, in 2021, Iran was the 57th largest trading partner of Germany ^[10]

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Germany's role in nuclear deal negotiations

The election of centrist Hassan Rouhani as president of Iran in the summer of 2013 provided Germany and the entire West with an opportunity to change course.

The subsequent negotiations on the nuclear program became possible primarily due to two main factors: the United States inevitably abandoned its unrealistic and, consequently, counterproductive demands for "zero enrichment" in Iran. In addition to this, the White House became increasingly dissatisfied with its closest regional allies, mainly Israel and Saudi Arabia, which prompted it to view Iran as a reliable player when it came to stabilizing a crumbling and very fragile region. As part of the negotiating team, the German Federal Ministry of Foreign Affairs facilitated the conclusion of the nuclear deal. He constantly lobbied for the deal publicly as well as behind closed doors and positioned himself against any potential threats to the deal. Having accomplished a huge diplomatic feat, the P5+1 and Iran finally reached an agreement in July 2015 — the Joint Comprehensive Plan of Action (JCPOA).

The 5+1 negotiations on the nuclear deal marked an increase in Germany's international status: for the first time, Germany was able to shape global policy together with the five powers of the United Nations veto. Indeed, Germany had a significant influence in the negotiations, as it was represented twice: both through its national representative and through the EU's lead negotiator Helga Schmid. Schmid, the former office manager of former Foreign Minister Fischer, who has good relations with Chancellor Merkel, has established herself as an authoritative figure in negotiations with the Iranian side. 

Secondly, for Berlin, the JCPOA served as a model of how much more can be achieved with the help of patient diplomacy. He was seen as a prototype of a European foreign policy pursued in a completely different direction than that of the United States.

The provisions of the JCPOA are indeed historical in nature. It is based on the lifting of sanctions related to the nuclear program (sanctions imposed during the nuclear crisis by the UN and US allies, primarily the EU), in exchange for Iran's agreement to reduce its nuclear program. In December 2015, the International Atomic Energy Agency (IAEA) confirmed that Iran had fulfilled its promise ^[9].

Even the most skeptical Western nuclear experts working on the Iranian dossier expressed great satisfaction, agreeing that the JCPOA would make it impossible for Iran to create a nuclear bomb. However, it should be remembered about the provision of the agreement that sanctions can be restored in case of violation by Iran of the agreement — an unlikely prospect, given that the Iranian elite is seeking to get rid of sanctions. Moreover, the JCPOA continues to support the arms and missile embargo against Iran for the next five and eight years, respectively, thereby ensuring that the regional imbalance in terms of conventional weapons between Iran and, above all, the countries of the Gulf Cooperation Council, will decrease to remain in place.

Before the JCPOA, many expected that the agreement would have a weakening effect on regional geopolitics, as well as on Iran's domestic policy. This may turn out to be true in the medium and long term; however, in the short term, the reverse dynamics has emerged: political repression in Iran has intensified under the guise of rapprochement with the West, and the already unrestrained anti-Iranian discontent of important political actors in the region (primarily Saudi Arabia) has only grown.

Since the agreement was reached in 2015, the Foreign Ministries of Germany and Iran have not ceased to emphasize that the nuclear deal can and should serve as a plan for solving other crises in the region and even beyond. However, the regional perception of the JCPOA is very different from this European assessment. The nuclear deal with Iran has increased the concern of regional players about the strengthening of Tehran's geopolitical position in the region. In particular, the traditional US allies in the region are now even more suspicious of Iran. They fear that Washington has chosen Tehran as its new main regional ally and thereby will give it complete freedom of action in regional politics. Consequently, a new alliance of Saudi Arabia, Turkey and Israel against Iran has emerged.

After the nuclear deal, Ankara intensified its ties with Israel, emphasizing the need to improve the security of the latter. More importantly, despite Turkey's previous intention to pursue a policy of equidistance towards Tehran and Riyadh, a pro-Saudi geostrategic trend has now materialized in Ankara. This shift was reflected in the establishment in early 2016 of the Turkish-Saudi Strategic Cooperation Council at a high level, which is based on the countries' overall assessment of regional conflicts. Its common denominator is probably the goal of both countries to resist the influence and power of Iran, especially when it comes to Syria. However, despite the deterioration of Iranian-Turkish relations (mainly due to the fact that they support different sides in the war in Syria), both countries have separated regional rivalry from bilateral relations focused on ambitious trade goals ^[7].

The nuclear agreement paved the way for Iran's return to the global economy. At the end of 2015, Morgan Stanley, a multinational financial corporation of the United States, stated:

Iran is the largest economy to return to world life after the collapse of the Soviet Union, and similarities include the complexity of the sanctions regime involved, an attempt at political rapprochement with the West, and Iran's vast energy wealth. [...] In many respects, Iran has no direct comparison, given its economic size, the scale of the sanctions imposed and its political structure. In particular, Iran's potential reintegration into the global economy may be uncharted territory, since there is no other frontier hydrocarbon economy that would be subject to comparable economic and political sanctions ^[2].

Germany is very enthusiastic about the possibility of reviving the once flourishing trade with Iran. Immediately after the signing of the JCPOA, a delegation of German business circles headed by the Minister of Economy and Energy and Vice Chancellor Sigmar Gabriel was the first to fly to Tehran to conclude trade deals. According to the Iranian Chamber of Commerce, Industry, Mining and Agriculture (ICCIMA), before the sanctions were imposed, Germany was Iran's second largest business partner after the UAE.

Many observers, not only in Europe, consider Iran one of the few markets with guaranteed growth this year. In the context of slowing economic growth in China and the fact that demand in the former growing markets of Russia and Brazil is falling sharply, the hopes of exporters around the world are pinned on post-sanctions Iran ^[6].

 In the West, the demand in Iran is huge and diverse: the country needs trucks, cars, machinery, power plants, medical equipment, consumer goods, as well as many other things. Expectations are particularly high in Germany because German firms have played an important role in building Iran's industrial infrastructure for decades.

In this vein, the head of the Foreign trade department of the German Engineering Federation (VDMA, Verband Deutscher Maschinen- und Anlagenbau), which represents more than 3,100 companies, mostly medium—sized, in the capital goods industry, making it the largest industry association in Europe, said: "Iran is the only country in the region with a broad industrial base. There is a demand for everything" ^[4].

In addition, Iran is very rich in natural resources. In addition to the fact that the country has the world's second largest reserves of hydrocarbons (oil and gas combined), it owns 7 percent of the world's mineral reserves, a significant part of which remains unused, which potentially presents great opportunities for foreign mining companies ^[8].

Although Germany plans to revive exports of manufactured goods to Iran, it will be much more difficult to make investments. Germany and Iran face a special dilemma. According to Golverdi Golestani, an entrepreneur from Tehran and former president of the Iranian Association of Auto Parts Manufacturers (IAPMA), "Germany is making more efforts to export goods to Iran than investing in domestic production; Iran, on the other hand, hopes to expand domestic production to create jobs for its youth and improve its own industry" ^[3].

Iranian-German relations are improving, however, the scale and extent of their cooperation on regional security issues remains to be seen, as the EU still maintains its usual business relations with its traditional partners in the region, many of whom are part of the anti-Iranian front.

The emergence of a new anti-Iranian alliance creates serious problems for European policy in a region that is increasingly characterized by the rejection of strong Iranian influence on the Arab-majority part of the world. Although Saudi Arabia will remain the most important Arab player for Europe, the mass executions in early 2016 — perhaps for the first time — made Europe question its close partnership with Saudi Arabia. This could lead to Riyadh losing its privileged position as Europe's main ally in the long run. However, in the foreseeable future, the West is likely to continue close cooperation with Saudi Arabia. As a result, balancing between continuing the process of rapprochement with Iran and maintaining normal business relations with Saudi Arabia will create even greater difficulties for the West in the future. As many have noted, the West's Middle East policy lacks a consistent strategy.

 The latest escalation between Iran and Saudi Arabia has undoubtedly turned the idea of an inclusive regional security architecture into a simple wishful thinking. The next escalation in the region will only be a matter of time until regional security issues are properly resolved.

This function can be studied in two different periods of the existence of the Islamic Republic. The first stage began with the birth of the revolution and until the end of the 1980-1988 war between Iran and Iraq. The second stage dates from the period from the first presidency of Ayatollah Hashemi Rafsanjani to the present. In the first period, Germany's influence on European policy towards Iran was very limited for various reasons. Among the reasons for this is that the common European foreign policy has not yet been formulated, and, in fact, the European Community (EU) had little freedom of action in foreign policy due to the ideological rivalry between the United States and the Soviet Union ^[11].

Although favorable trade and economic relations with Iran for a government like Germany are considered a strategic advantage, which greatly contributed to Germany's political support for Iran in the transatlantic community, security factors played a crucial role in reducing the level of economic relations between the two countries.

Iran states that German companies are seeking to expand their activities in the Islamic Republic by participating in Iranian trade shows.

Chairman of the Board of the Federal Association for Economic Development and Foreign Trade of Germany (BWA) Michael Schuman took part in a meeting with Iranian MP Ehsan Gazizadeh Hashemi and Iranian Ambassador to Germany Mahmoud Farazande, as well as Alireza Peyman-Pak, head of the Iranian Trade Promotion Department ^[5].

According to the IRNA website of the Iranian government, Shuman said that trade relations with the Islamic Republic can be expanded regardless of political issues. He welcomed the establishment of an Iranian trade center in Berlin and called for German businessmen to be allocated more space at exhibitions in Iran.

The report quotes him as saying that the sanctions imposed against the Islamic Republic turned out to be more detrimental for German businessmen than for their Iranian counterparts.

On July 21, 2022, the British Ambassador to Iran also highlighted the business opportunities for increasing trade between the UK and Iran, regardless of the outcome of negotiations on the resumption of the 2015 nuclear talks.

Conclusion

Despite many positive signs, the future of German-Iranian relations will depend on a number of international, regional and domestic factors, the development of which is difficult to predict with any certainty. Meanwhile, it is important to assess the trajectory of German-Iranian relations in particular and Western relations with the region as a whole against the background of past experience.

The policy of the Islamic Revolutionary Guard Corps (IRGC) in Iran's neighborhood cannot be easily separated from its political and economic interests inside the country, as it seeks to preserve its irreplaceable role in Iran's security and foreign policy, as well as to preserve its economic condition, which is largely due to Iran's relative isolation and antagonism with the West.

As for Iran, apart from Germany, the positions of Great Britain and France are less important. Since 1982 (that is, three years after the arrival of the Islamic Revolution), Germany has been trying to define the European discourse in relation to the Islamic Republic of Iran. He intensified these efforts after his reunion and conducted them more consistently. In fact, by adopting a policy of "change through interaction", Germany was able to keep Europe from following the US policy of containing and isolating Iran for some time. In addition, it made Europe Iran's most important trading partner before the introduction of tough sanctions by the Security Council.

Iran's geopolitical attractiveness, along with Iran's willingness to welcome Germany as an active player in the Middle East and the Persian Gulf, as well as pressure from the country's economic groups to develop trade relations with Iran, encourage Germany to take a leading role in European foreign policy towards Iran.

There is a great interest in cultural exchange and bilateral scientific and academic relations between Iran and Germany. Many Iranian scientists and academics have studied at German universities and support joint German-Iranian research projects and strengthen bilateral cooperation in the field of higher education. In addition, the German Sprachinstitut Teheran (DSIT) and the German Academic Exchange Service (DAAD) of the German Embassy actively promote cultural exchange and German as a foreign language.