TEHRAN German Vice Chancellor Sigmar Gabriel urged Iran at the start of a three-day visit to improve its relationship with Israel if it wanted to establish closer economic ties with Germany and other western powers.
Gabriel, who is also economy minister, is the first senior figure from a large western government to visit Iran since it struck a landmark agreement with world powers on its nuclear program last week.
The deal was reached despite strong opposition from Israel, with which Germany has cultivated a close relationship since the end of World War Two, when the Nazis killed six million Jews.
That puts Germany in a delicate position as it seeks to win new business in Iran after a 12-year standoff over Iran's nuclear program during which sanctions sharply reduced trade and investment.
Conscious of that diplomatic difficulty, Gabriel kicked off his trip with a plea for Iran to improve relations with arch-enemy Israel and said Germany would like to act as a mediator.
"You can't have a good economic relationship with Germany in the long-term if we don't discuss such issues too and try to move them along," Gabriel told a gathering of German and Iranian business people in Tehran.
"Questioning this state's (Israel's) right to existence is something that we Germans cannot accept," he said, adding that now Berlin and Tehran can re-establish closer ties it was necessary to talk about human rights.
Gabriel, who will hold talks with Iranian President Hassan Rouhani and several ministers, said he wanted to talk to human rights representatives in a country that the United Nations says is guilty of human rights violations against women, religious minorities, journalists and activists.
By traveling to Tehran with a delegation of industry group representatives and company officials, Gabriel sends a strong signal that Germany wants to quickly rebuild economic and political ties with Iran.
Under an agreement struck on Tuesday, sanctions imposed by the United States, European Union and United Nations will be lifted in exchange for Iran agreeing long-term curbs on a nuclear program that the West thought was intended to make a nuclear bomb. Tehran has always denied seeking nuclear arms.
Gabriel praised the agreement as "a first big step" and said it was now possible for trade between the countries to increase.
"The agreement reached between the E3+3 and Iran in Vienna has laid the foundations for a normalization of economic relations with Iran," Gabriel said before setting off earlier on Sunday. E3+3 refers to the group of countries that negotiated with Iran.
"The precondition for this is that the steps foreseen in the agreement are now implemented," said Gabriel.
German industry groups have said exports from Europe's largest economy to Iran could as much as quadruple in the next few years due to the nuclear deal and companies like Volkswagen and Siemens as well as thousands of smaller family-owned firms are eager to claw back their dominant role in shipments to Iran.
Germany was once Iran's leading supplier from outside the region but in 2007 it lost that position to China, which now sends 15 to 20 times as many goods there as Germany does.
Eric Schweitzer, head of Germany's DIHK chambers of trade and commerce, said Gabriel's trip was "a very good sign" for business and while German-Iranian trade would not immediately soar, it could more than double to a value of 6 billion euros within around two years.
In the medium term it could even jump to 10 billion euros, Schweitzer said.
(Writing by Michelle Martin; editing by Ralph Boulton)