Iran to profit from Israel's submarine deal with ThyssenKrupp

Israel is purchasing
German submarines
to protect itself
against its archenemy
Iran. However, the
Islamic Republic
stands to profit from
the deal financially.



In a cabinet meeting in late
November, Israeli Prime
Minister Benjamin
Netanyahu emphasized that
the new submarines were
absolutely necessary to
ensure Israel's existence.
The Dolphin-class
submarines, made by
Germany's ThyssenKrupp
Marine Systems (TKMS), are
to conduct reconnaissance
missions off the coast of
Iran. They could also see
action should there ever be
a military conflict between
the two countries.
Israel feels threatened by
Iran, and Iran refuses to
acknowledge the existence
of the state of Israel.
Netanyahu is up in arms
about the nuclear deal
between Iran and the UN
Security Council and
Germany, which US
President Barack Obama
has said will make the
world a safer place. The
Israeli prime minister is
convinced that Iran remains
dedicated to becoming a
nuclear power. Israel's new
Dolphin-class submarines
could also be retrofitted to
carry nuclear warheads.
"These are strategic
weapons systems that
ensure the future and, I tell
you, the very existence of
the state of Israel for
decades to come," stressed
Netanyahu.
Iran: A major investor
But one country will profit
from the deal immediately:
Iran. Israel's archenemy is
one of ThyssenKrupp's
investors, and it has been
so since 1974.

During the shah era, the
governments of Iran and
Israel were the best of
friends. Both were also
allies of the United States.
With its coffers overflowing
after the oil crisis of the
early 1970s, Iran went on an
international shopping
spree. At the time, Iran
invested $400 million (383
million euros) in Germany's
Krupp corporation,
purchasing 25 percent of its
shares.
After the Islamic revolution
in 1979, Iran entered a long
war with Iraq. Iran needed
cash, and sold off a portion
of its shares. Yet it still held
about 8 percent of the
company's equity share.

$100 million in
profits?
In 2003, that share shrunk
further: Mohammed
ElBaradei, then director
general of the International
Atomic Energy Agency
(IAEA), published a report
accusing Iran of hiding
certain nuclear materials
and activities. Under
pressure from the US, the
conglomerate
ThyssenKrupp eventually
bought back shares from
Iran. The company saw to it
that Iranian investments
made up less than 5 percent
of its equity share. To do so,
ThyssenKrupp paid Iran 406
million euros, which was
three times market value at
the time.
Currently, Iran is thought to
hold about 4.5 percent of
the company's total shares.
Responding to a DW
inquiry, ThyssenKrupp said
that neither Iran, nor any
other investor, had the right
to information or influence
regarding sales decisions at
the company. ThyssenKrupp
says that investors receive
only dividends.
The three new submarines
to be built for Israel will
carry a price tag of 1.2
billion euros. It is unclear
how much profit Iran will
see from the deal. The
Israeli newspaper "Haaretz"
estimates that Iran has
made roughly $100 million
dollars in profits from its
investment in
ThyssenKrupp over the last
10 years. No one wants to
talk about the investment in
Tehran.
Controversial in Israel
and Germany
Israel already has five
Dolphin-class submarines,
and another is scheduled to
be delivered in 2017. The
country's former defense
minister, Moshe Yaalon,
says Israel does not need
any more submarines. "I
was strongly opposed to the
purchase of three new
submarines," he said in
November. Yaalon resigned
in May, after a spat with
Netanyahu.
Meanwhile, Israel's attorney
general has called for an
investigation of the deal,
which is shrouded in
accusations of cronyism:
Netanyahu's personal legal
advisor also represents an
Israeli businessman that
works for ThyssenKrupp as
a sales partner. He could
stand to make millions in
profits should the deal go
through. It remains unclear
whether there is any
substance to the corruption
allegations. Netanyahu
claims to have known
nothing of the connections.
The investigation is
ongoing.
The fact that the Dolphin-
class submarines could also
be outfitted with nuclear
warheads - a touchy issue in
the turbulent Middle East -
has sparked debate over the
deal in Germany as well.
Israel has never admitted
that it possesses nuclear
weapons, but experts
estimate that it has between
100 and 200 nuclear
warheads and missiles.
Iranian hardliners
oppose the nuclear
deal
Israel's interest in
purchasing three new
submarines has given
hardliners in Tehran one
more reason to criticize the
nuclear deal and accuse the
reform-minded government
of Hassan Rouhani of
failure. The "Fars News
Agency," a news outlet with
close ties to Iran's
Revolutionary Guard, claims
that Israel is preparing for
a potential nuclear war
with Iran.

The powerful Revolutionary
Guard was strictly opposed
to the nuclear deal. It was
reported that Iran had
enough nuclear material to
build an atomic bomb
before the deal was signed.
The agreement stipulates
that this material is to be
reduced to just a fraction of
that which would be
necessary to make an
atomic weapon. This
limitation will remain in
place for 15 years.
And that is exactly where
hardliners see Rouhani's
failure. Netanyahu's
intention of meeting future
American president Donald
Trump to discuss ending the
agreement seems to suit the
wishes of Iran's hardliners.
That will bring difficulties
for the current reform-
minded administration in
Tehran ahead of next May's
Iranian presidential
elections, and possibly
thwart its plans to further
open the country.
"There are a number of
ways to annul the deal,"
says Netanyahu. During the
recent US presidential
election, Donald Trump
called the deal - which was
signed in July 2015, after
years of negotiations - a
"catastrophe."