Tough Iran sanctions to hit Germany hard - report

BERLIN, Nov 24 (Reuters) The adoption of tougher sanctions against Iran over its nuclear programme could cost the German budget 2 billion euros, according to Finance Ministry estimates cited in Der Spiegel magazine today.

Germany, Britain, France and the United States called this week for the United Nations to consider more severe sanctions because they say Iran has failed to allay concerns about its atomic work.

Chancellor Angela Merkel has also vowed to press German companies to reduce trade with Iran, which the West fears is trying to build nuclear weapons.

Der Spiegel reported that if Iranian Bank Melli, which handles most of Germany's trade with Iran, were placed on a European Union embargo list, it would cost the budget 700-800 million euros (1-1.2 billion dollar) next year because the government would be forced to pay damages to German firms.

Over the medium term, finance ministry experts believed tougher sanctions could cost Berlin 2 billion euros, according to the magazine. The ministry did not return calls for comment on the report.

Germany is one of Iran's largest trading partners in the EU, although exports have fallen sharply this year amid pressure from the United States for German firms to cut their ties to the Islamic Republic.

Iran says its nuclear programme is for peaceful civilian energy purposes.

REUTERS JT RAI2126