Business & Defense

Germany and Saudi Arabia agree to be friends again

Bundesaussenminister Heiko Maas L SPD trifft sich mit Adel bin Ahmed Al Jubeir R Aussenminist
The diplomatic version of kissing and making up. Source: imago

Germany and Saudi Arabia have agreed to normalize relations following a meeting on the sidelines of the general United Nations meeting in New York this week. Saudi Arabia will soon return ambassador Khalid bin Bandar bin Sultan al-Saud to Germany, which in turn will ship Mideast expert Jörg Ranau to Riyadh as ambassador.

Riyadh pulled its ambassador from Germany in 2017 after a dispute with then-Foreign Minister Sigmar Gabriel, who accused the kingdom of “adventurism” in its foreign policy while criticizing it for interfering in politically unstable Lebanon. Saudi Arabia also banned big orders to German companies.

Heiko Maas, Germany’s new foreign minister since March, said he regretted the dip in relations, which he labeled a “misunderstanding”. Germany should have been clearer in its communication, he said, apparently satisfying the Saudis – Saudi Foreign Minister Adel al-Jubeir invited Mr. Maas to talks in Saudi Arabia.

An arms deal of sorts precedes the reconciliation – earlier this week Berlin government approved the delivery of a reconnaissance radar system to Saudi Arabia – despite concerns about Saudi military intervention in the Yemen civil war. The vehicle-mounted radar gear pinpoints the location origin of enemy fire and enables precise counter-attacks.

Reviving exports

A source told Handelsblatt the agreement included a compromise with the German government – the Saudis assured that they would not use German military equipment in the Yemen conflict. The document is to dispel the concerns of the left-leaning Social Democrats, who don’t want arms fed into the civil war in Yemen. German business leaders now hope for a resumption of the once-good business relations with Saudi Arabia.

Last year, German exports to the Gulf’s largest economy had fallen from €6.6 billion from €7.3 billion as large orders that once went to German companies were awarded elsewhere.

The task now is to organize a new start. Siemens CEO Joe Kaeser and the CEO of Deutsche Bank, Christian Sewing, will be key speakers at a major investor conference at the end of October in Riyadh. Crown Prince Mohammed bin Salman is organizing the conference as head of the supervisory board of the PIF sovereign wealth fund.

Last year the crown prince announced the $500 billion megaproject to construct the new city of Neom. Former Siemens boss Klaus Kleinfeld was tapped as CEO and a former manager at defense group Rheinmetall moved to the top of a newly-founded Saudi defense company.

Mathias Brüggmann is an international correspondent for Handelsblatt. Moritz Koch is a political correspondent in Berlin. To contact the authors: brueggmann@handelsblatt.com and koch@handelsblatt.com

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