Middle East ties Trading Terror for Business

The Gulf states offer great business opportunities, but terrorism means many go untapped. German politicians and businessmen think increased trade links can help tackle both problems.
We'll build the dumpling factory here: German Foreign Minister Frank-Walter Steinmeier in Saudi Arabia.

The Hajj, the pilgrimage to Mecca Muslims should make at least once in their lifetime, can be a taxing undertaking, both spiritually and physically.

The annual mass gathering of humanity is also a testing environment for another sort of pilgrim: The businessman. With millions of people gathering in one spot, lucrative opportunities are plentiful, as German firms are finding out.

For example, the crane maker Liebherr built 20-meter-high parasols to provide shade for the 2.5 million pilgrims as they tour through Islam’s holy sites in temperatures above 40 degrees Celsius (104 Fahrenheit).

And industrial giant Siemens helped to build part of Mecca's metro. It is also working with another German firm, Knorr-Bremse, to build a $23-billion (€17.4 billion) high-speed train link between Mecca and Medina by 2019.

And it’s not just the Saudis using Middle East petrodollars to buy German products. Abu Dhabi is relying on industrial specialist Linde to expand its petrochemicals facilities, and Dubai’s super rich have rebounded from the financial crisis and are once again eagerly buying Mercedes, Porsches and BMWs.

In total, Saudi Arabia and the United Arab Emirates, which includes the statelets of Abu Dhabi and Dubai, bought German goods worth €10 billion in 2014. Other Gulf states are equally keen on products made in Germany.

Both Saudi Arabia and Qatar lust after German weapons, yet frequently prove how few of the West's values they share.

But for how long? Political pressure is building on the region’s ageing autocratic regimes, both at home and abroad. The low price of oil is cutting into budgets just as the Islamic State terrorist regime is emboldening extremists across the Middle East.

Following the deadly attacks in Paris, many in the West are asking if the Gulf states are true partners in the war on terror. Why are sanctions slapped on Russia for meddling in Ukraine, but not on those Arab countries that appear to tolerate the death and destruction caused by IS terrorists?

There are plenty of reasons to be skeptical. Gas-rich Qatar has been slow to staunch money flowing to IS fighters, and Saudi Arabia only reluctantly joined the alliance against the terrorists last fall. Until then, the extremists had been a useful tool of the countries' Sunni Muslim rulers' machinations against Syria’s Bashar al-Assad and Shiite-dominated Iran.

But the IS monster they helped to create is now beyond their control.

Video: A look at Liebherr's giant parasols in Mecca.



Dealing with such nations is a tricky issue for the German government. Both Saudi Arabia and Qatar lust after German weapons, yet frequently prove how few of the West's values they share.

For example, the Saudis this month sentenced a blogger, who dared to question Islam’s superiority to other religions, to 1,000 lashes. He will be whipped 50 times each week for 20 weeks – or until he dies.

Should Germany even do business with such countries? “At the moment, it’s a disastrously fake partnership,” said Omid Nouripour, the foreign policy spokesman for Germany’s opposition Green party. “We have to stop it.”

Mr. Nouripour said both Saudi Arabia and Qatar “are more part of the problem than the solution in the fight against terror.” Both refuse to cut off the financing of terrorism from their soil. But without Western pressure, they will not cooperate, he said.

European defense firm EADS last year won a deal worth $1 billion to seal Saudi Arabia’s 900-kilometer-long border with Iraq using a high-tech fence.

Niels Annen, a parliamentarian for the center-left Social Democrats, who are junior coalition partners with Chancellor Angela Merkel’s conservative Christian Democrats, doesn’t completely agree.

“More trade is always an instrument to have influence,” said Mr. Annen, who opposes selling German tanks in the Gulf region because they could be used against peaceful protestors.

He said, however, sending patrol boats could help to contain the war in Syria. And European defense firm EADS last year won a deal worth $1 billion to seal Saudi Arabia’s 900-kilometer-long border with Iraq using a high-tech fence complete with thermal imaging and radar.

The region’s autocratic regimes appear to have finally realized that IS poses them problems, for example by questioning their legitimacy. But the change in thinking came only after the IS leadership called for jihad against Turkey and the House of Saud, the ruler of which, King Abdullah, died today.

“It would be totally wrong to punish Middle Eastern countries with sanctions,” said Volker Perthes from the German Institute for International and Security Affairs. “IS is no longer dependent on donations. They are largely independent and finance themselves through revenues from the large area that they control in Iraq and Syria.”

We hope to have more political support when it comes to awarding contracts in the Arab world. Steffen Behm, Association of German Chambers of Commerce and Industry

He said the terror group’s sources of money include kidnappings and extortion, taxes and tolls, and, in particular, illegally exported oil from Iraq. The German foreign ministry estimates that IS earns $1 million a day from it. There is no evidence of funding coming directly from Arab governments.

But the growing instability in the region is one reason why German Foreign Minister Frank-Walter Steinmeier and Economy Minister Sigmar Gabriel will travel to the Gulf in the coming weeks.

“We hope to have more political support when it comes to awarding contracts in the Arab world,” said Steffen Behm, from the Association of German Chambers of Commerce and Industry.

He can likely depend on Mr. Steinmeier, who sees aiding German business as a method of effecting political change. But the West has little hope of turning the Gulf into a model of liberal democracy. At the moment, it’s more about keeping the region from being consumed by chaos and Islamist ideology.

 

This article originally appeared in the business magazine WirtschaftsWoche. To contact the author: [email protected]