Desert Bloom

The Middle East: An Oasis for German Exports

Middle East Wintershall Seele
An oil pipeline belonging to the Wintershall company in Libya, photographed in 2011.
  • Why it matters

    Why it matters

    Oil, construction, pharmaceutical and food industries could profit by filling the region’s need for German technology.

  • Facts

    Facts

    • The assessment came from Rainer Seele, chairman of Germany’s biggest oil and gas producer and also chair of the Near and Middle East Club of the German Economy.
    • The mostly oil-rich states are Germany’s third most important trading partner outside Europe, after the United States and China.
    • The conflict in Iraq won’t greatly increase the price of crude oil, he said.
  • Audio

    Audio

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As chairman of Germany’s biggest oil and gas producer, Rainer Seele has seen it all. Wintershall has production facilities not just in political oases such as Norway and Great Britain but also in Libya – despite all the wartime imponderables, both before and after the fall of Muammar Gaddafi.

But even hardened entrepreneurs can hardly fail to be overwhelmed by the concentration of war and conflicts in the region. In view of the conflict in the Gaza Strip and the advance of the Islamic State, Mr. Seele said, “I cannot imagine many colleagues summoning up the entrepreneurial courage to increase their investments in these countries.”

Mr. Seele was in Berlin on Monday, not as boss of Wintershall, but as chairman of the Near and Middle East Club of the German Economy, to give his evaluation of this crisis-torn, neighboring region of Europe.  Mr. Seele told it the way it was. Why shouldn’t he? After all, the wars and conflicts affect the economy too. Volker Treier, the German Chamber of Commerce’s head of foreign trade, said, “Confidence can hardly be built  in such times, German companies are holding back with investments or are even leaving the site locations.”

However, Mr. Seele warned about writing off the entire region: The Near and Middle East offers “enormous potential for the German economy.” Like many other experts, he called for a differentiated approach to the Arab world.

Even if the perception in the West is frequently different: The region between Syria and Morocco doesn’t consist purely of wars and conflicts.

Even if the perception in the West is frequently different: The region between Syria and Morocco doesn’t consist purely of wars and conflicts. The six Arab states of the Gulf Cooperation Council are prospering. The mostly oil-rich states are Germany’s third most important trading partner outside Europe, after the United States and China. Exports to the United Arab Emirates increased by 16 percent in the first half year; the Saudi royal family is investing hundreds of billions of euros in its infrastructure, in industrial plants and universities.

 

german exports 2013 - arab world

 

Mr. Seele primarily had the Gulf states in mind when he talked about opportunities for German investors. These countries have huge needs for German technology, from much more than just the oil sector. He named the construction, pharmaceuticals and food industries as examples. Germany’s secretary of state for economic affairs, Brigitte Zypries, also named the renewable energies sector as a possible beneficiary. Helping the states in their development projects was “a great opportunity” for companies.

Iran is also a source of new hope. Negotiations about Teheran’s nuclear program are progressing constructively. Should they actually lead to a comprehensive agreement in November, then the hard economic sanctions would be lifted. “The return of Iran to the mainstream world community would have enormous economic potential,” Mr. Seele said. He also reported German companies traditionally enjoy a good reputation among Iran’s 80 million people.

That Mr. Seele didn’t paint all too black a picture has to do with the low economic importance of the crisis-torn countries. With exports of €1.3 billion last year, Iraq was only in 64th place on Germany’s list of target countries for exports.  Syria was of little economic importance, even before the civil war, and the same applies to neighboring Jordan, Lebanon and Yemen.

Economists are most concerned about oil-rich Libya, where militias struggle for power with increasing brutality. The German volume of trade with Libya plummeted by more than half in the first six months. Despite the turmoil, however, the country has managed to increase its oil production to 700,000 barrels per day.

As most of Iraq’s reserves were in the south and beyond the territory controlled by the Islamic State extremists, Mr. Seele was confident the turmoil wouldn’t greatly increase the price of crude oil, which is so important for the economy. “I do not see big risks for oil production,” he said.

This article was translated by Bob Breen. Vinny Kuntz also contributed to the story. To contact the author: Hoppe@handelsblatt.com

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