Political tension forces Munich Re to pull out of Iran

Munich Re Pull Out of Iran

The current political situation in Iran could prove to be hugely damaging to the nation's future economic development as foreign investors become more concerned by the increasingly unstable environment in the Islamic republic.

Munich Re, the world's largest re-insurer, has become the latest German company to withdraw from Iran as pressure mounts for new sanctions to be imposed on the country over its nuclear development programme.

The company have insisted they will not renew any existing contracts when they expire or write any new business whilst the political situation remains hostile. Whereas to a firm generating close to US$54 billion in premiums each year, the loss of an estimated US$13.5 million is small, the move is politically significant.

Cutting ties with Iran

The announcement followed a similar move by German engineering giant Siemens last month, and came amid pressure from Germany's partners to cut its business ties with Iran. Germany, which recently lost its crown to China as the world's top exporter, exported almost four billion euros worth of goods to Iran in 2008, mainly machine tools and industrial equipment, a rise of nearly nine percent.

Germany are in the process of phasing out Iran from the overseas business portfolio as the German government is applying pressure on chambers of commerce not to organise seminars on Iran or business trips there.

President Ahmadinejad is putting his country's future economic and social development at great risk by continuing to go against UN requests to wind up its nuclear programme for fears that Iran's intentions are not wholly peaceful.

On Wednesday the top US military officer, Admiral Mike Mullen, warned that Iran was "becoming a nuclear weapons capable country and that is very dangerous." He did say however that Washington's priority was to initiate "dialogue and engagement" with Iran, but it looks like Germany have gone past that point.

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Daniel Jones

Daniel is a Politics and Philosophy graduate from Cardiff University where he also worked as a section editor on the award winning student newspaper. After university he joined an IT support company where he was a B2B online writer. He loves anything to do with sport and joined GDS in July 2009.

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