By on April 15, 2010

You may not know that Cammy is a Chemist by trade. With a degree at college and university. If you bug me, I know enough to blow you up. That aside, in chemistry, there is a theory called “Le Chatelier’s Principle”. It states that:

If a chemical system at equilibrium experiences a change in concentration, temperature, volume, or partial pressure, then the equilibrium shifts to counteract the imposed change and a new equilibrium is established.”

Now why am I telling you this?

The BBC reports that Daimler is deserting Iran. They are divesting their 30 percent stake in Iranian Diesel Engine Manufacturing, a subsidiary of Iranian Khodro Diesel. According to Dieter “Now THAT’S a moustache!” Zetsche, Tehran’s political policies were the reason of this divestiture. “In view of the current political situation we have… extensively reassessed this business relationship,” Dr Z said. In addition to this, Daimler has withdrawn its application to export commercial vehicles for civilian use in Iran. Now why is this significant?

Well, according to another moustachioed German, Germany and Iran have enjoyed very close trading ties for years. A quick look at Wikipedia shows that companies like Volkswagen and MAN and many more have big contracts in Iran and many other companies have branches in Iran. They also were the biggest exporter to Iran. So for Daimler to say “Auf Wiedersehen” is a big thing.

Is this the beginning of a mass exodus from Iran? Well, the New York Times believes so. Peter Löscher, CEO of Siemens has said that his company will pull out gradually (no dirty jokes please) from Iran over the next couple of years, due to the size of presence in Iran. Speaking of Siemens, that other moustachioed German reminds me that there are on-going rumors that Germans are selling at least dual-use technology to the Iran. Siemens is selling compressors that could be used to make missiles. A German company called Herrenknecht, considered the market leader in tunnel-boring machines, has three offices in Iran. The Iran is interested in digging deep tunnels.

Germany’s Federal Office of Economics and Export Control is scrutinizing more closely every request by a German company to export to Iran, to the extent that Germans lose interest. Especially with the threat of Israel to drop some bombs on installations. It’s no surprise that the exodus of German companies from Iran followed a state visit to Berlin by the Israeli president, Shimon Peres, who officially warned that Israel would be a target if Iran obtained nuclear weapons. And who probably unofficially mentioned what Israel intends to do about that.

Now there are ways to get around export controls. Third  parties. Which leads us to another country that has long standing relationships with Iran.

France.

France’s Total is deep in bed with Iran. The aforementioned Iranian Khodro goes back a long way with PSA (Peugeot-Citroen).Renault has their own subsidiary in Iran with the Dacia Logan being built in Tehran. Total is in Iran in partnership with Renault. And who’s in bed with Renault? Daimler.

With the big hole emerging in Iran’s economy, who will fill it? The French will fill some of it. But they are also hampered by a possible sanction regime. Who else is there? Well, as the New York Times said:

“China is Iran’s largest trading partner, responsible for about 14 percent of its imports and exports in 2008.” Le Chatelier’s Principle in action. It gets even more complicated. Someone probably already communicated to Washington: “If you pressure us to make the Yuan more expensive, then we are forced to find other markets for our goods. There are folks in Teheran who practically beg us.”

Chemistry class dismissed.

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