Germany Playing Kissy-Face With Iran’s Mullahs Is Going To Cost German Companies Plenty

I’ve posted a few times on the efforts on the part of some European countries, Germany, in particular, to continue to trade with Iran despite US sanctions (see here | here). This, of course, is nonsense. German, and European, companies that are hit with sanctions are cut off from US markets and, more importantly, their bankers are subject to sanctions, too. Two important things happened today that, hopefully, will hammer home to Europe that their plan to resist US sanctions on Iran won’t work.

First, we have Ambassador Richard Grennell. Grennell, you’ll recall, is the guy who gave the Washington Post a brief bout of fecal incontinence when he tweeted, shortly after confirmation:

As @realDonaldTrump said, US sanctions will target critical sectors of Iran’s economy. German companies doing business in Iran should wind down operations immediately.

— Richard Grenell (@RichardGrenell) May 8, 2018

Tonight Grennell was on Fox and he reiterated that warning, only in much more stark terms:

The awesome Amb. Richard Grenell lays down the law: Companies can either “choose to do business with the United States, or they can choose to do business with Iran; but they’re not going to be able to do both.” pic.twitter.com/Cx0plpYJad

— Josh Caplan (@joshdcaplan) May 25, 2018

Also today, Saudi Arabia declared that German firms are ineligible for government contracts:

Saudi Crown Prince Mohammed bin Salman has ordered that no more government contracts be awarded to German companies, in a sign of continued irritation over Berlin’s foreign policy in the Middle East, German magazine Der Spiegel reported on Friday.

Citing no sources, it said the move was likely to hit major companies such as Siemens (SIEGn.DE), Bayer (BAYGn.DE) and Boehringer Ingelheim as well as carmaker Daimler (DAIGn.DE).

Relations between Germany and Saudi Arabia have been strained, and Saudi Arabia last year summoned its ambassador in Germany home for consultations over comments by then-Foreign Minister Sigmar Gabriel about the political crisis in Lebanon.

Saudi Arabia is a significant trade partner for Germany, generating 2017 exports worth 6.6 billion euros ($7.7 billion), according to Germany’s statistics office.

Siemens last year won an order worth around $400 million to deliver five gas turbines for a combined heat and power plant being built in Saudi Arabia. Daimler soon after secured an order for 600 Mercedes‑Benz Citaro buses from Saudi bus operator SAPTCO.

A senior German businessman in Saudi Arabia, who asked to remain anonymous, told Reuters on Friday that especially the healthcare sector was currently feeling added scrutiny when applying for Saudi tenders.

“They have even been asking: Where are the products coming from? Are they made in Germany? Do you have other manufacturing sites? And as soon as this is made in Germany, they have been rejecting any German applications for tender,” the person said.

This is a tightening of screws on the EU. Not only will companies be cut off from US markets but the Saudi market will be off limits as well. Unless they are willing to accept Iran as their only trading partner, they have to fall in line.

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