Germany tells firms to show ‘sensitivity’ on Iran deals

Germany on Wednesday called on companies to show "sensitivity" if they choose to do business in Iran after a German-Iranian gas deal drew sharp criticism from Israel.

Germany tells firms to show 'sensitivity' on Iran deals
The South Pars gas field in Iran. Photo: DPA

Berlin had not levelled a general ban on German contracts with Iran, but was urging firms to take all factors into account before deciding to work with the Islamic republic, deputy government spokesman Thomas Steg said.

“We warn companies of the extremely sensitive nature” of economic ties with Iran, he told a regular government news conference, adding that Berlin also expected firms to employ their “moral sense” if they invest there.

The Israeli government last week expressed concern over a €100-million ($155-million) deal between Germany’s Steiner group and Tehran to build three liquefied natural gas plants in Iran.

Steg said that because the deal did not violate international sanctions against Tehran over its nuclear programme or fall under German regulations requiring a government review, Berlin had not had to give its authorization. But he called on companies to display “sensitivity” in the contracts they pursued.

Germany is one of Iran’s biggest trade partners. Its exports to Iran totalled €3.6 billion last year. But Berlin is working with Western powers to convince Tehran to abandon sensitive nuclear work. It has reduced export guarantees with Iran, and German banks have largely ceased doing business with the Islamic republic over its nuclear programme.

French energy giant Total had won a contract for work at Iran’s sprawling South Pars gas field including the construction of a gas liquefaction plant that Tehran intended to use for energy exports.

But last month, the group announced it would suspend investment in Iran because it was politically too risky. Israel, the region’s sole if undeclared nuclear armed power, considers Iran its greatest threat.


German government announces fresh relief package for high energy costs

With Russia's invasion in Ukraine exacerbating high energy and petrol prices, Germany is set to introduce a second relief package to limit the impact on consumers.

German government announces fresh relief package for high energy costs

The additional package of measures was announced by Economy and Climate Protection Minister Robert Habeck (Greens) on Sunday.

Speaking to DPA, Habeck said the wave of price increases throughout the energy sector were becoming increasingly difficult for households to bear.

“Extremely high heating costs, extremely high electricity prices, and extremely high fuel prices are putting a strain on households, and the lower the income, the more so,” he said. “The German government will therefore launch another relief package.”

The costs of heating and electricity have hit record highs in the past few months due to post-pandemic supply issues. 

This dramatic rise in prices has already prompted the government to introduce a range of measures to ease the burden on households, including abolishing the Renewable Energy Act (EEG) levy earlier than planned, offering grants to low-income households and increasing the commuter allowance. 

READ ALSO: EXPLAINED: What Germany’s relief package against rising prices means for you

But since Russia invaded neighbouring Ukraine on February 24th, the attack has been driving up energy prices further, Habeck explained.

He added that fears of supply shortages and speculation on the market were currently making the situation worse. 

How will the package work?

When defining the new relief measures, the Economics Ministry will use three criteria, Habeck revealed. 

Firstly, the measures must span all areas of the energy market, including heating costs, electricity and mobility. 

Heating is the area where households are under the most pressure. The ministry estimates that the gas bill for an average family in an unrenovated one-family house will rise by about €2,000 this year. 

Secondly, the package should include measures to help save energy, such as reducing car emissions or replacing gas heating systems.

Thirdly, market-based incentives should be used to ensure that people who use less energy also have lower costs. 

“The government will now put together the entire package quickly and constructively in a working process,” said Habeck.

Fuel subsidy

The three-point plan outlined by the Green Party politician are not the only relief proposals being considered by the government.

According to reports in German daily Bild, Finance Minister Christian Lindner (FPD) is allegedly considering introducing a state fuel subsidy for car drivers.

The amount of the subsidy – which hasn’t yet been defined – would be deducted from a driver’s bill when paying at the petrol station. 

The operator of the petrol station would then have to submit the receipts to the tax authorities later in order to claim the money back. 

Since the start of the war in Ukraine, fuel prices have risen dramatically in Germany: diesel has gone up by around 66 cents per litre, while a litre of E10 has gone up by around 45 cents.

READ ALSO: EXPLAINED: The everyday products getting more expensive in Germany

As well as support for consumers, the government is currently working on a credit assistance programme to assist German companies that have been hit hard by the EU sanctions against Russia.

As reported by Bild on Saturday, bridging aid is also being discussed for companies that can no longer manage the sharp rise in raw material prices.

In addition, an extension of the shorter working hours (Kurzarbeit) scheme beyond June 30th is allegedly being examined, as well as a further increase in the commuter allowance.