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In Germany, bad bank helps Iran

July 19, 2010 at 12:12 PM   |   Comments

HAMBURG, Germany, July 19 (UPI) -- In a bid to go around Western sanctions, Iran is using a small bank in Germany to do business on behalf of the regime's blacklisted companies, Western officials say.

The Wall Street Journal reports that the Iranian-owned European-Iranian Trade Bank from Hamburg has conducted more than $1 billion worth of business for Iranian firms linked to the country's alleged nuclear weapons program.

They include units of an Iranian defense procurement company, the Aerospace Industries Organization and the infamous Revolutionary Guard Corps -- entities sanctioned by the United States, the United Nations and the European Union, the newspaper writes, citing unnamed Western officials.

They told the paper that EIH Bank last year did business on behalf of Iran's broadly sanctioned Sepah Bank, which has been accused of being involved in weapons trade for Iran.

While EIH Bank is blacklisted by the U.S. Treasury, it isn't by the United Nations; therefore, the German banking oversight agency Bafin hasn't restricted business of the small institution.

That could soon change. A spokesman for the German Economics Ministry told the newspaper that European authorities are investigating whether to blacklist additional banks that have in the past months increased their business with Iranian firms.

The news about the Hamburg bank will only increase Washington's concerns about German-Iranian finance and trade links.

Germany remains the Islamic republic's largest trading partner in Europe. In the first four months of this year, trade grew to $1.8 billion, up 20 percent from the same period last year, numbers from the German-Iranian Chamber of Commerce in Hamburg indicate. Washington has urged its European allies to cut back on trade with the Islamic Republic.

German Chancellor Angela Merkel has relayed the message to companies but the Germans are concerned that competitors from Asia simply pick up the abandoned contracts -- resulting in a painful shift of business that would result in little additional pressure on the regime.

Iran denies Western allegations that its nuclear program is aimed at building nuclear weapons, vowing instead that it is for civil and energy purposes only.

The conflict has been going on for years; the West has in the past imposed an ever tighter web of U.N.-mandated sanctions in bid to force Iran to halt nuclear enrichment and cooperate with the West. Tehran argues it has the right to pursue nuclear energy independent from international oversight.

Meanwhile, an exiled Iranian opposition group eager to see the Iranian regime overthrown but designated a terrorist organization by the United States scored a victory in a Washington appeals court.

The U.S. Court of Appeals for the District of Columbia recently decided that the State Department must review its designation of the People's Mujahedin Organization of Iran as a foreign terrorist organization. In its 22-page verdict, the judges said the State Department has failed to give the group a fair chance to overturn the listing.

The State Department has upheld the terrorist label for the PMOI several times since 1997 -- most recently last year, citing classified information it has gathered against the group, arguing it was still dangerous.

The PMOI was founded in 1965 in opposition to the shah but was squashed by the mullah regime that took power in 1979. Its remaining members living in a camp in Iraq were disarmed by U.S. forces after the U.S.-led Iraq war, but its broad support with Iranian expatriates in Europe means that it remains one of the main opposition groups to the current regime in Tehran.

"It is totally unreasonable to keep them on the list at this point," Andrew Frey, a partner at Mayer Brown law firm and one of the PMOI's lawyers, told the Legal Times. "The PMOI stands for a democratic, secular, non-nuclear Iran. They stand for everything we'd like to see in Iran."

The European Union removed the PMOI from its terror list in 2009, a year after Britain did so. The German interior security agency Verfassungsschutz this year stopped mentioning the organization in its yearly report, after having monitored it for the past years.

© 2010 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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