German companies trading with Iran will no longer receive so-called Hermes guarantees, industry and government insiders told the paper, saying that Chancellor Angela Merkel and Economy Minister Michael Glos supported the action. Only small companies will be excused from the new rule, Handelsblatt reported.
"With this, Berlin is reacting to growing criticism from its partner," the paper said. "More than others, the USA and Israel have criticised the fact that German trade with Tehran has significantly increased since 2008, despite UN sanctions against the Iranian nuclear programme and warnings from the government itself to the economy against new deals."
German exports to Iran increased by 10.5 percent to €3.58 billion in November 2008, the paper said. But the new move to strengthen sanctions against Iran is meant to support new US President Barack Obama's offer to begin talks with Iran's leader Mahmoud Ahmadinejad, the paper said.
But German firms that trade with Iran are angry about the move, and mechanical engineering firms are particularly afraid that other foreign companies will benefit. Some European Union officials are also critical of the decision.
“Of course it's right to always have both sweetmeats and a whip in hand,” Czech Foreign Minister Karel Schwarzenberg told Handelsblatt. “But sanctions need to be well considered. We shouldn't follow the motto: ‘We impose sanctions, just so we can say we've done something'.”
EU Foreign Ministers are scheduled to discuss the issue in Brussels on Monday.