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German firms ignore EU appeal, end Iran’s projects

Deutsche Telekom and Deutsche Bahn, two state-owned German companies, are following car manufacturer Daimler and mechanical engineering company Herrenknecht to withdraw from Iran because of US sanctions.

Deutsche Telekom, Europe’s largest telecommunications provider, already stopped all transactions in Iran in May. Deutsche Bahn will have its projects phased out by the end of September, German weekly business news magazine Wirtschaftswoche reported Thursday.

Both companies have confirmed the report. They are ignoring an appeal by EU Foreign Policy Chief Federica Mogherini, who has called on Europeans to intensify Iran’s business in response to President Donald Trump’s sanctions.

Deutsche Bahn is currently involved with its subsidiary DB Engineering & Consulting in two projects in Iran, a corporate spokeswoman said on Thursday.

“Both projects will be ended in August and September 2018 respectively,” she said. “Due to the altered banking practice we have sought to bring the contract to an amicable and timely conclusion.”

Like other companies, the German rail operator is troubled by the fact that many international banks are now refusing to handle major financial transactions with Iran.

In May 2017, the company signed a Memorandum of Understanding (MoU) with the Iranian railway operator Bonyad Eastern Railways (BonRail) for the first project to identify and address potential in rolling stock and organization.

The second project involved a consultancy contract for the Iranian state railway RAI that included restructuring the company.

Deutsche Telekom already stopped all transactions in Iran in May. The company probably wants to remove the risk of providing US regulators with a pretext to stop the laboriously negotiated takeover of Sprint Corp by its US unit, T-Mobile.

Just three weeks after the announcement of the takeover, Telekom pulled the ripcord on May 18 and withdrew all employees of its in-house consulting Detecon from Iran.

“The business activities of Detecon in Iran were quite low. Until the decision was taken, sales in Iran amounted to about 300,000 euros in 2018,” said a spokeswoman.

Detecon, a subsidiary of Deutsche Telekom’s IT services arm T-Systems, had deployed employees with the fixed-line operator Telecommunication Company of Iran (TCI) and the mobile operator MTN Irancell to offer consulting services.

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