Dresdner Cuts Ties to Iran

Political pressure from the United States as well as rising administrative costs are reasons that Dresdner Bank is joining other German financial institutions in withdrawing from Iran, according to the Financial Times Deutschland (FTD).

"Dresdner Bank is ending its activities with Iran and in Iran," the financial daily quoted a bank spokesman as saying on Wednesday. By the end of 2006, Dresdner Bank's lending, which was already below 500 million euros ($674 million), had already fallen to under 100 million. Export finance guarantees will be maintained through to their expiration date, according to FTD.

A growing number of European financial institutions, including Germany's Commerzbank and Deutsche Bank, have also scaled back on existing business or restricted their dealings in Iran. In July, Deutsche Bank closed all personal and business accounts in Iran.

US has tried to cut off business to Iran for years

For years, the US government, which has accused Iran of supporting terrorism, has been trying to isolate the country and cut off international business there. Washington has also spearheaded a crackdown on trade and the UN Security Council has imposed sanctions on Iran in order to put pressure on Tehran’s leaders for refusing to suspend its nuclear enrichment program.

Germany is one of Iran's leading trade partners, but after Germany's major commercial banks scaled back business last year, exports dropped by 12 percent for the first half of 2006 compared to the same period the previous year.

Analysts say, however, that punitive measures against the state are unlikely to force Tehran to bow to international pressure to halt uranian enrichment, and that sanctions will have a limited impact as long as the oil money keeps flowing.