GERMAN LAW LIMTS ABILITY TO STOP OIL AND GAS

C O N F I D E N T I A L SECTION 01 OF 02 BERLIN 001693

SIPDIS
EEB/ESC/TFS FOR COULTER, NEA/IR FOR GROEN

E.O. 12958: DECL: 12/15/2018
TAGS: ENRG EPET ETTC PREL IR GM
SUBJECT: GERMAN LAW LIMTS ABILITY TO STOP OIL AND GAS
TECHNOLOGY EXPORTS TO IRAN

REF: A. STATE 127601

B. BERLIN 1050

Classified By: EMIN Robert L. Pollard, for reaons 1.4(b) and (d)


1. (C) Summary: Senior German government officials, have all
expressed support for the principle that Iran should not
receive liquefied natural gas (LNG) technology from Germany,
although, legally, their hands are tied in seeking legal
action against German companies. German officials once again
underlined their strong preference for multilateral action.
Officials indicated a willingness to use moral suasion in
exceptional cases; however, they are skeptical that such
efforts are effective against SME companies. End Summary.


2. EMIN and Emboffs met with Viktor Elbling, MFA Deputy
Director General; Karl Wendling, Ministry of Economics Deputy
Director General; and Andreas Nicolin, Federal Chancellery
Chief of Foreign Trade Policy to deliver points in Ref A. As
is usually the case, the Econ Ministry stuck to a strict
legal interpretation while the Chancellery took a more
nuanced position.


3. (C) On December 5, MFA Deputy Director General Viktor
Elbling voiced his awareness that LNG deals with Iran are
under discussion within the EU and said that Germany
understood the scope of the issue. However, he also noted
that German laws severely limit the steps Germany can take
against German companies dealing in non-proscribed goods and
services. Elbling claimed he was not familiar with problems
in connection with Linde AG and emphasized the need for more
information. (Note: Post subsequently supplied additional
information from EEB/ESC to MFA and Econ Ministry contacts.)


4. (C) Elbling said once Germany has analyzed this
information they can re-evaluate the situation and could
consider approaching Linde. He said Germany may need to
consider informal pressure (moral suasion) on larger firms,
as German national law may not permit legal sanctions against
these companies. However, he emphasized that moral suasion
is a special tool and cannot be used all the time. This
approach is not likely to be an effective tool to sway SME,s
(&Mittlestand8) companies.


5. (C) Elbling differentiated between high technology LNG
projects and lower technology gas-to-liquid (GTL) projects,
such as used by Steiner-Prematechnik-Gastec's firm (REF B).
(Note: MFA Iran Desk Chief Andreas Krueger echoed this
position to EmbOffs in a separate meeting.) He clarified
that true LNG projects produce gas requiring special handling
for use, while GTL projects make synthetic petroleum products
similar to those created from crude oil. Elbing indicated
Germany is more concerned with denying Iran LNG technology
than its lower-tech relative, GTL.


6. (C) On December 8, Ministry of Economics Deputy Director
General Karl Wendling gave a similar response. Specifically,
he claimed Germany cannot impose unilateral, legally-binding
measures on the export of civil goods (those with no dual-use
concerns),asserting that only the EU has this authority.
The EU, Wendling said, currently has no laws against
providing LNG technology to Iran. The Economics Ministry has
found no evidence that the Linde project has dual use
implications. They recognize that Linde,s effort provides
expertise that is difficult to replace, but expressed concern
that Japan and possibly Switzerland might fill any void
created by Linde,s withdrawal. Wendling asked if Japan and
Switzerland are in any way committed to constraining LNG
technology or equipment transfer to Iran.


7. (C) Wendling also drew a distinction between the sale of
goods and the provision of technical services. The latter,
he stated, is even more difficult to control because German
law does not cover the provision of technical services at
all, and only the EU could take steps to limit the provision
of such services. Wendling's staff subsequently advised
Econoff that Linde has submitted no projects to Germany's
export control office (BAFA) for review to date.


8. (C) On December 16, the Chancellery,s Chief of Foreign
Trade Policy, Andreas Nicolin stated that he was unaware of
any specific project where Linde was providing Iran with LNG
technology or services. Similarly, he was unaware of BASF or
Sud-Chemie providing services or parts to Iran's energy
sector. He did state, however, that the German Government
could discuss this topic with involved parties, i.e., to
discourage business activity in the LNG sector, in specific

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and identifiable cases. (Elbling and Wendling had made
similar statements and placed the responsibility for such
actions on the Chancellery.) Nicolin further acknowledged
that Chancellor Merkel herself had privately discouraged
large German firms from providing LNG technology to Iran
Koenig