"I think some of what is going on in America has to be seen as part of the election campaign," said Klaus Kinkel, the German Foreign Minister. "But on the other hand, it is a measure Europeans cannot accept."
Under the new law, foreign companies investing more than $40m in either country face sanctions in the US. Washington justifies this novel form of punishment, which the Europeans say is against international law, by accusing Iran and Libya of sponsoring terrorism.
Refusing to be drawn into a debate about the seriousness of the threat posed by the two countries, Mr Kinkel insisted that cutting them off completely from the international community would be counter-productive. Whilst German trade with Libya is minimal, Bonn has been cultivating close political and economic ties with Tehran, in the spirit of its policy of "critical dialogue".
"We think it is more correct to remain in talks with Iran and not to put it into a corner speechless, but rather use talks to work against the things Iran is accused of," Mr Kinkel said.
Bonn's high-profile engagement with Tehran has drawn fire from critics in the German parliament, but it has also produced some results. Last month, Germany earned Israel's gratitude by securing the release of the remains of two Israeli soldiers held by Hizbollah. The breakthrough was negotiated by Germanany's spy chief, Bernd Schmidbauer, after talks with his counterpart in Tehran.
The two countries' intelligence agencies keep in close contact, apparently undisturbed by the fact that Iran runs its spying operations from its Bonn embassy. Recent investigations into the murder of three Kurdish leaders in a Berlin restaurant in 1992 have established that the order for the assassinations had come directly from President Akbar Hashemi Rafsanjani, portrayed by German officials as the force of moderation in the Islamic Republic.
"We know very well what sort of danger emanates from [Iran]," Mr Kinkel said yesterday. But the Bonn government is equally aware of extensive German investments in Iran now threatened by the US law, and resents the perceived American attempts to clip Germany's wings in the international political arena.Reuse content