The German government affirmed for the first time that there are currently no arms exports to Saudi Arabia allowed, including for weapons that have already been granted an export license. Berlin announced its decision Monday in the wake of the international outcry over the murder of the Saudi journalist Jamal Khashoggi last month.
A vocal critic of the Saudi regime who lived in the United States and wrote for US newspapers, Khashoggi disappeared in the Saudi consulate in Istanbul on October 2. According to Turkish investigators and the CIA, he was brutally killed in the building by a death squad sent by Riyadh and his body was dismembered.
Shortly after the grisly murder, Chancellor Angela Merkel said all arms exports to Saudi Arabia were being put on hold. But Monday's announcement was Germany's first mention of an explicit ban on all arms exports to the Middle Eastern kingdom.
Arms manufacturers had previously said they would expect reimbursement from the German government for work already done on authorized exports under the legal principle of legitimate expectation. However, there has been no mention of reimbursement from Berlin so far.
The problem from the industry’s point of view is that without a clear retraction of the export permission, it remains uncertain whether there will be reimbursement.
Saudis are prime customers for German arms
Saudi Arabia is one of Germany’s best customers for arms. In the first quarter of this year, there were €160 million in new export permissions, three times the year-ago period. The family-owned Lürssen shipyards in Bremen accounts for the bulk of outstanding orders with €1.5 billion for some 50 patrol boats. The kingdom seeks to protect its coasts from threats from regional rival Iran.
Lürssen had been scaling back production in anticipation of an embargo and announced just a few days ago it had fully suspended the work, which is being done primarily in the Peene shipyard in Wolgast in northeastern Germany.
Berlin's latest decision marks another twist in a rocky year for German-Saudi relations. The new rupture comes just months after bilateral relations smoothed over an earlier rift occasioned by a remark from Germany's former Foreign Minister a year ago. In November last year, Sigmar Gabriel accused Riyadh of holding Lebanese Prime Minister Saad Hariri in Saudi Arabia against his will and called it “adventurism.”
The remark angered Saudi Arabia and prompted Riyadh to recall its ambassador from Berlin, allowing him to return only after 10 months of frosty relations. This period of relative normalcy was very short before the murder of Khashoggi in Turkey erupted in an international crisis.
Waiting for CIA report
Germany is one of the biggest supplier of arms to Saudi Arabia after the United States, and Washington is due as early as Tuesday to disclose what the CIA knows about the Khashoggi killing. The question for future relations is whether Crown Prince Mohammed bin Salman, who virtually runs the country now, personally authorized the assassination.
Other European countries have been less reluctant to halt arms exports. French President Emmanuel Macron recently affirmed the Khashoggi murder is not a reason to ban exports. Italy and Spain are also continuing arms exports. Spain is even willing to export bombs that are being used in the Yemen conflict. Madrid is also planning to deliver five frigates to the Saudi navy.
Germany’s export ban probably depends on the CIA report, even though Berlin authorities deny it. In the meantime, German Foreign Minister Heiko Maas Monday announced a prohibition for 18 Saudi nationals implicated in the murder for entering Germany. Ironically, it was Maas who had worked hard to smooth over the rift caused by his predecessor Gabriel’s accusations.
Impact on overall trade
is another big arms supplier presumably hit by the ban. The company supplies Saudi Arabia with trucks from its Austrian factories and munitions and projectile components from Italy and South Africa. The projectiles are assembled in Saudi Arabia from imported components so they may not fall under the ban.
It remains to be seen what impact the German arms embargo has on overall trade. German companies have high hopes for participating in the €500 billion “Neom” project to build an ultramodern city in the desert, especially since former Siemens manager Klaus Kleinfeld was put in charge of the project.
Overall German exports to the kingdom fell to €6.5 billion in 2017, from €7.3 billion in the previous year as Saudi firms were kept from considering German exporters in the aftermath of Gabriel's accusations. Daimler, Bayer, Boehringer and other big German companies felt the impact from that boycott.
Axel Höpner, Martin Murphy, Torsten Riecke and Donata Riedel contributed to this article. Darrell Delamaide adapted it into English for Handelsblatt Global. To contact the author: [email protected].