To Isolate or Engage Iran? Germany and US at Odds

JUST what is Islamic fundamentalism? Should the West feel threatened? And how should the West deal with it?

The possibility that fundamentalist-controlled Iran may be on the verge of going nuclear is helping to focus Western attention on these questions. Though most Western governments generally agree on the security dangers, strategies differ widely on how to deal with Iranian-style fundamentalism.

One school of thought, backed by the United States, favors a policy of isolation to prevent Islamic fundamentalism's spread. Germany, stands at the other end of the spectrum, arguing that political and economic engagement is the best way to moderate Iran's behavior.

''Cooperation is the best way,'' says Udo Steinbach, director of the German Orient Institute, based in Hamburg.

''If you help the economies [of Islamic nations], much of the fundamentalist support will fade away,'' he adds.

Germany's stance threatens to intensify friction with the US. Some US officials, supported by advocates of Israel's security, imply that Germany's position is cynical and possibly dangerous, putting economic interests ahead of security concerns. Germany conducts more than $1 billion in trade with Iran every year, although trade volume has shrunk in recent years.

Skeptical of Germany's stance

''Iran is the chief sponsor of international terrorism and an implacable foe of the peace process in the Middle East, yet Germany maintains a relationship with it,'' says Rabbi Andrew Baker, head of the American Jewish Committee's European Department. AJC group leaders recently met with German Chancellor Helmut Kohl and other officials to discuss differences over Iran.

The German officials ''used phrases like 'critical dialogue,' '' Rabbi Baker continues. ''The German view is that they can help them [Iran] move incrementally in a positive direction. We are skeptical of that.''

US concern is rising in the wake of an Iranian-Russian agreement, in which Moscow pledged to finish construction on an Iranian nuclear plant. The Iranian and Russian governments insist the nuclear facility is for peaceful purposes. But some experts say the plant could eventually produce nuclear weapons.

Iranian agents have been active in Germany monitoring Iranian dissident activities and coordinating arms smuggling, according to news reports. German laws hinder authorities from using wiretaps and other surveillance methods to keep track of Iranian and other foreign agents.

German officials bristle at suggestions that Bonn's Teheran policy is helping to arm Iran. Although Germany does not maintain a trade ban on Iran, Germans say their policy contains fewer loopholes than US legislation, decreasing the chances that Teheran can acquire items with military applications.

''There are a lot of goods that aren't war-related,'' says Hans-Peter Stihl, head of the German Chamber of Industry and Commerce, referring to Bonn's Iranian trade. ''This is peaceful trade and shouldn't become the subject of politics.''

Charges of US hypocrisy

German experts and officials also accuse the US of hypocrisy. Washington demands that others sever ties with Iran while US companies -- acting through international subsidiaries that are circumventing trade restrictions -- conduct thriving business with Teheran, they complain.

President Clinton took action to bolster the US image by signing an executive order on Tuesday preventing the Dutch subsidiary of US-based Conoco Inc. from developing two Iranian oil fields. Mr. Clinton maintained that while Conoco technically was not violating US laws, the deal could harm US security.

Despite differing views on how to confront Islamic militancy, experts on both sides of the Atlantic view the issue with concern. In addition to the Iranian nuclear-proliferation threat, Western officials worry about fundamentalism as a source of terrorism.

In considering moves to combat Islamic militancy, it must be understood in its proper context, German experts and officials say.

''Islamic fundamentalism has little to do with religion. It is clearly and exclusively a political movement,'' says Mr. Steinbach, the Islam expert. ''I prefer to call it 'Islamism', making an ideology out of religion.''

The terrorist threat is a significant influence on German policy. The Red Army Faction, a German leftist urban terrorist group, destabilized West German society during the 1970s and 1980s. Ever since the RAF's pacification, German officials have tried not to do anything to resuscitate a terrorist threat, whatever the origin, on German soil.

As for Iran, the source of danger may not be Islamic fundamentalism but a resurgence of Iranian nationalism, Steinbach says.