Angela Merkel stops India-Bundesbank Iran oil deal

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http://economictimes.indiatimes.com...-iran-oil-deal-report/articleshow/7873380.cms

BERLIN: Chancellor Angela Merkel has put a stop to plans that have irked Washington and Israel for India to channel oil payments to Iran through the German central bank, a press report said Tuesday.

According to the Handelsblatt business daily, India, under US pressure to break direct commercial links with the Islamic republic, intended to place money for its Iranian oil imports in an account with the Bundesbank.

The Bundesbank would then transfer the money -- around nine billion euros ($12.8 billion) annually -- to the European-Iranian Trade Bank AG (EIH), based in the northern German city of Hamburg, the paper had said.

The German government had said it was powerless to stop the deal because EIH , also known as EIHB, was not subject to sanctions because the bank was not involved in financing Iran's controversial nuclear activities.

The New York Times last week quoted an unnamed US Treasury official as saying the United States was "concerned" and that Washington wanted "to work with all our allies to isolate EIH."

Israel and Jewish groups were also reported to be annoyed.

But now, Berlin has stepped in, the Handelsblatt cited high-ranking German government officials as saying on Tuesday. Payments for oil already delivered can go ahead, but no new transactions will take place, the paper said.

Contacted by AFP, neither the Bundesbank nor the German economy ministry were immediately available for comment.

Germany has long been under fire for its close business ties with Iran, with the country's exports there totalling 3.8 billion euros in 2010, according to official figures.

Sales generated by German industrial giant Siemens in its last business year, which ended September 30, rose more than 20 percent to 680 million euros, the Wall Street Journal reported Tuesday.

 

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Merkel intervenes to stop Iran bank trade

(Reuters) - German Chancellor Angela Merkel has intervened to stop billions of euros of Indian oil payments from reaching Iranian accounts via Germany, a newspaper reported on Tuesday.

Citing government sources, Handelsblatt business daily said Germany will no longer authorise its central bank, the Bundesbank, to clear the payments headed to Hamburg-based EIH -- a bank under U.S. but not EU sanctions.

Israel, whose Prime Minister Benjamin Netanyahu meets Merkel this week, wants Germany to shut down the German bank, saying it supports the spread of weapons of mass destruction by handling payments to participants in Iran's contentious nuclear program.

EIH came under renewed scrutiny last week when it emerged Berlin had allowed India to pay for billions of euros of oil purchases from Iran via the bank, after India restricted its own direct payments to Iran to placate Washington.

The United States had pressed Germany over the matter, although Berlin officials had said their hands were tied because the bank had not broken any EU rules, which allow payments for Iranian oil and natural gas.

The apparent reversal has not come without a cost for German companies, which according to Handelsblatt now face hundreds of millions of dollars in bills outstanding for products ordered from Iran, some of which the oil money would have likely covered.

The move will increase pressure on Tehran, already under a series of U.N. sanctions for refusing to freeze its uranium enrichment program, which Western powers suspect is aimed at producing a nuclear weapon.

Iran denies the allegations, trumpeted loudest by the United States and Israel, that it is enriching uranium to produce atomic arms, and maintains that its programme is for peaceful energy needs.