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ENERGY

Munich Re to stop doing business in Iran

Munich Re, the world's biggest reinsurer, on Friday became the latest German firm to pull out of Iran as pressure grows for new sanctions against the Islamic republic over its nuclear programme.

Munich Re to stop doing business in Iran
Photo: DPA

The company said in a brief statement that due to the “political situation” it has decided not to renew any existing contracts when they expire or to write any new business.

For a firm generating close to €40 billion ($54 billion) in premiums each year, the loss of an estimated €10 million is small, but the move is politically significant.

The announcement follows a similar move by German engineering giant Siemens last month, and comes amid pressure from Germany’s partners to cut its business ties with Iran.

Germany, which recently lost its crown to China as the world’s top exporter, exported almost €4 billion worth of goods to Iran in 2008, mainly machine tools and industrial equipment, a rise of nearly nine percent.

In the 11 months to November 2009, the latest figures available, exports fell nine percent, a spokesman told AFP last month, but this was less than the 19-percent recession-fuelled slump that Germany recorded overall.

Chancellor Angela Merkel said in January that German-Iranian trade had “declined considerably” while acknowledging that the two countries had a “long tradition of economic cooperation.”

At the same time Germany is one of six countries negotiating with Tehran over its nuclear programme, along with permanent UN Security Council members the United States, China, Russia, Britain and France.

Merkel has been forthright in calling for more pressure on Iran over its nuclear activities, which Tehran says are for peaceful purposes but which Washington and others suspect are a front for developing nuclear weapons. Berlin has already reduced to a trickle the special export guarantees crucial to companies trading with Iran.

In addition, according to press reports, the German government is applying pressure on chambers of commerce not to organise seminars on Iran or business trips there.

A restricted report obtained by AFP on Thursday showed that the UN atomic watchdog, the International Atomic Energy Agency (IAEA), is concerned that Tehran may be working on a nuclear warhead.

The 10-page document, which is to be discussed by IAEA governors next month, also confirmed Tehran had begun enriching uranium to higher levels, theoretically bringing it closer to the levels needed for an atomic bomb.

On Wednesday the top US military officer, Admiral Mike Mullen, warned that Iran was “becoming a nuclear weapons capable country and that is very dangerous,” although he stressed that Washington’s priority was to initiate dialogue and engagement with Iran.

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ENERGY

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.

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