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What's Rankling the Swiss Foreign Ministry?

Exposing how the Swiss are enabling Iran’s illicit nuclear weapons program.

3:37 PM, Oct 5, 2010 • By BENJAMIN WEINTHAL
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What's Rankling the Swiss Foreign Ministry?

Micheline Calmy-Rey

Switzerland’s Social Democratic controlled Foreign Ministry is upset with THE WEEKLY STANDARD’s criticism of how its foreign policies serve as a crutch for Iran’s drive to obtain nuclear weapons and finance Hamas and Hezbollah.

After TWS posted a September article detailing Swiss foreign minister Micheline Calmy-Rey’s appeasement of the Iranian regime (and the Swiss energy company EGL’s massive gas deal with Iran), her spokesman Lars Knuchel wrote, “I would hope that you would include context to our foreign policy actions to the necessary extent when - as you did in the `Weekly Standard’ recently - you speak out against Switzerland.”

The Swiss are irritated over my failure to mention Swiss compliance with UN sanctions against Iran and its top diplomat’s role in securing the release of Sarah Shourd, one of the three American hikers who was held by the Iranians on bogus espionage charges.

“Permit me to express my astonishment to you, with all due respect,” Knuchel wrote. “There is no question that Switzerland has consistently applied the UN sanctions to Iran. And no question that Switzerland has consistently worked to prevent evasions. This is very unfortunate. I do not wish to speculate here about the reasons that you simply deprived your readers of such basic information...I would like to refer you – if you have not already heard of it – to the thanks that both U.S. President Obama and U.S. Secretary of State Clinton recently expressed publicly towards Switzerland in Washington in connection with the release of a U.S. citizen in Tehran. “

Let’s leave aside the question of why the Swiss are refusing to adhere to tough U.S. and EU sanctions against Iran and delve into Switzerland’s alleged compliance with the largely symbolic, UN sanctions. In a Wall Street Journal Europe article last week, Mark Dubowitz and I broke the story that the Swiss tunnel company Ceresola TLS delivered (and continues to ship) heavy earth moving equipment to Iran’s Rahab Engineering Establishment.

As we noted, a United Nations resolution in June lists the similarly named Rahab Engineering Institute as one of the firms involved in ‘nuclear or ballistic missile activities,’ and says the Institute is owned by the government’s Islamic Revolutionary Guard Corps. Given Iran’s history of simply renaming sanctioned firms or using front companies, it may be no coincidence that both businesses have their offices on the same Valiasr Street in Tehran.

Given the exposure of Iran’s clandestine underground nuclear sites in Qom and Natanz and the regime’s burning desire to acquire new tunnel equipment, why did Switzerland green-light the sale of Ceresola equipment to the mysterious Rahab Engineering Establishment?

Swiss-Iranian trade relations function along the lines of the largely unregulated freewheeling Dubai trade zone. That helps to explain Switzerland’s delivery of nuclear-related pressure gauges to Iran earlier this year and the recklessly passive behavior of Swiss officials. According to reports in the Swiss media (20 Minuten und SonntagsZeitung), these devices are precisely what President Ahmadinejad’s nuclear program requires to enrich uranium.

It is probably no coincidence that the first energy company the U.S. State Department cited as a violator of the new U.S.-based sanctions legislation is the Swiss-based Iranian company Naftiran Intertrade.

Meanwhile, the Swiss energy giant EGL’s estimated €18-27 billion euro gas deal with the National Iranian Gas Export Company is the largest active European gas deal. After a Foundation for Defense of Democracies report urged the U.S. State Department to trigger an investigation into whether the EGL has violated U.S sanctions targeting Iran’s energy sector, EGL announced that it will not use Iranian gas for the Trans-Adriatic Pipeline project.

But while EGL’s representatives claim Iranian gas will not flow through the TAP pipeline project, EGL has not terminated its 2008 gas deal with Iran and is currently in negotiations with Botas, a Turkish state-owned gas and pipeline company, which has its own connections to transporting Iranian gas through a Botas pipeline in the future.

The EGL-Iran deal and other European energy trade with Tehran prompted Rep. Brad Sherman (D-CA) last week to introduce a new round of Iran sanctions legislation to close loopholes for companies like EGL. Sherman’s proposal would sanction entities that pay in advance for oil deliveries or sign long-term contracts to purchase oil and gas from Iran.

“In 2003, Japan reportedly paid several billion dollars in cash for future oil deliveries over the next several years,” Sherman noted. EGL reportedly also signed a contract worth nearly $20 billion for future purchases of Iranian gas.

“When the world buys Iranian oil and gas,” said Sherman, “they should do so on a cash basis without long term commitment, lest they provide the Iranian government with, in effect, a bailout.”

All of this means that Switzerland’s Foreign Ministry and Swiss businesses from Ceresola to EGL should conform to Western security standards and adopt robust sanctions to stop Iran’s drive toward a nuclear weapon. Swiss neutrality is not an option against the Iranian threat.

Benjamin Weinthal is a fellow at the Foundation for Defense of Democracies.

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