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Germany raises Iran's export credits

By Haig Simonian in Berlin
Financial Times
July 11, 2000

The German government announced a fivefold increase in export credit guarantees in an attempt to boost trade with Iran after initial meetings with Mohammad Khatami, the country's pro-reform president. Photos here

Economic relations took precedence over human rights issues as the Iran leader began a three-day state visit to Germany criticised by both conservative opponents at home and Iranian exiles in Europe.

A surprisingly relaxed Mr Khatami declined to discuss human rights matters at a brief news conference with Gerhard Schröder, the German chancellor, on Monday.

However, members of the German delegation said human rights had been discussed at a 30-minute tete-a-tete between the two, during which Mr Schröder specifically raised the issue of 10 Iranian Jews tried for spying for Israel. The chancellor also inquired after Iranian reformers arrested after attending a conference in Germany.

"We made it clear we want to create a really substantial new start in relations between Germany and Iran," said Mr Schröder. "But we also discussed questions which are controversial and on which we disagreed." The chancellor said the talks had included measures to fight drugs trafficking and international terrorism.

Mr Khatami, whose visit to Germany follows ground-breaking trips to Italy and France last year, is keen to bolster relations with Europe and advance a hesitant dialogue with the US. In spite of opposition among the 116,000-strong Iranian community in Germany, Berlin officials have emphasised the need to support his policy of gradual opening.

Mr Khatami, who lived briefly in Germany as Imam of Hamburg in 1978, stressed the role improved relations with Berlin, and Europe, could play for his country. "We want a world in which all peoples are respected. No power should be able to close opportunities to others because of its strength. Europe has a special role in a multi-polar world," he said.

The German government believes that boosting Iran economically will bolster Mr Khatami's own standing. To that end, Mr Schröder said the increase in credit guarantees to DM1bn (E420m, $400m) could be stepped up. "Of course, we will get involved in big projects, when the opportunities arise," he said.

Although the new figure is five times higher than the DM200m guaranteed previously, it remains a fraction of the DM4-DM5bn some industry leaders had been calling for. "The increase is a good start, but will not be enough in the long term," said Klaus Lederer, chairman of the Babcock Borsig engineering group and head of the German business federation's north African and Middle East initiative.

Mr Khatami, stressing his message of co-operation between cultures, gained little sense of the protests against his visit, amid unprecedented security in Berlin. "Every opposition has the right to express itself. I won't protest against that," he said.


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