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 Rohani 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.

A strong signal

By travelling 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 after a 12-year standoff over Tehran's nuclear program.

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.

"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. 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, who is also Germany's vice chancellor.

Germany's DIHK chambers of trade and commerce has forecast that German exports could double to about 5 billion euros within just two years and companies like Volkswagen and Siemens as well as thousands of smaller family-owned firms are eager to take back their dominant role in shipments to Iran.

Iranian exiles' criticism

Gabriel told German newspaper Bild he would use the trip to suggest that Germany could be a mediator between Iran and its arch-enemy Israel and said he would insist that the Iranian government recognize Israel's right to exist.

"And really stable, good relationships with Germany will only be able to develop if this is accepted in Iranian politics. I will keep making that clear during my trip to Iran," Gabriel said in comments due to be published on Monday.

He said while the nuclear deal was a first step towards normalizing relations with Iran, further steps needed to follow in terms of Iran's role in conflicts in the region and especially its relationship with Israel.

"Germany can and wants to offer itself as a mediator for this," he was quoted as saying in an advance extract of the interview.

However, the visit was received with criticism from members in Berlin's large Iranian exile community. Fariborz Jabbari, the uncle of a young Iranian woman who was executed for killing a former officer who allegedly attempted to rape her, said Gabriel was "doing business with an inhumane regime."

"When he signs contracts, he should think about the people sitting in prisons, about the regime critics, the tortured, the condemned," he told Bild, AFP reported.

The head of the German chapter of Reporters without Borders urged Gabriel not to lose sight of human rights during his economic visit, and to call for the release of journalists jailed in Iranian prisons.

It would be "disastrous" if Gabriel put economic interests ahead of human rights and press freedom during his visit, Christian Mihr told Bild, AFP reported.