German Defense Industry Expert at Finding Loopholes and Legal Cracks

The entire world wants German military equipment, but Berlin limits the sales to countries which abide by western standards regarding human rights and international law. Caught in the middle, the German military industry tries to get creative to sell as much as possible. 

Highest tier of military equipment in the world

Qatar sent officials to Europe to browse the market for their next round of military acquisition. If Qatar’s lavish military spending is well known, the choice to visit German manufacturer Rheinmetall’s factory in Hungary, and not the headquarters in Germany, is not innocent. The Lynx, the latest production of Rheinmetall, has caught the attention of Qatari armed forces, after having already been purchased by Hungary, which partially produces it. The infantry fighting vehicle, one of the most advanced in the world, is produced jointly by Germany and Hungary. Qatar seems to pay high interest both in the vehicle itself, and in the very advanced and automated supply chain which produces it.

Berlin oversees all military sales

As part of its defense, diplomatic and industrial policy, Berlin reviews all transfers, and foreign nations can only buy with Berlin’s stamp. The goal is to prevent German equipment ending up in the wrong hands and being used either in terrorist activities or by governments which are notorious for violating human rights, or committing violence on civilians – something which has happened in the past and will no longer be tolerated by German civilian society. State secretary Sven Giegold states: “the German government is sticking to its restrictive basic line in arms export policy decisions, according to which the issue of human rights is of particular importance for all arms export policy decisions.” Until now, this has been a mere policy, and could be loosened or tightened according to situations. The policy will, in all likelihood, be enshrined in German law in the near future, to reflect Berlin’s commitment to not participate in any way in human rights breaches or civilian repression. Analyst Bastian Giegerich writes: “The coalition government has been working on crafting an arms-export law that firms up what until now had been political guidelines”, citing the bill which has been underway for some time and should be voted soon.  

Reactions by the press, the political class, and public opinion have increased steadily over the years. In 2015, the German government learned it had involuntarily armed the Islamic State, by transferring weapons to Iraq, which were later easily stolen by the terrorist organization. Deutsche Welle analyst Natalie Muller quoted the Amnesty International report stating: “30 percent of the arms used by IS extremists on battlefields in Syria and Iraq originally came from factories in Bulgaria, Romania, Hungary and Germany.” In 2014, tens of Mexican civilians were slaughtered using German Heckler & Koch weapons: “there is no doubt that the G36 rifles were fired in exactly this situation […] Export authorities explicitly excluded Guerrero and three other states when they approved exports to Mexico. Nevertheless, half of the almost 10,000 rifles delivered ended up in exactly these regions”, international reporter Wolf-Dieter Vogel writes

Bad news for military industries

If nations with questionable track records and reputations are no longer able to acquire German equipment, this will take a sizable portion of business away from the manufacturers who heavily rely on large international sales to finance their high-added-value business model. In short, the best clients could be banned by Berlin. In 2023, Germany exported nearly 12 billion euros worth of equipment, a vital relief for domestic industries who are seeing little increase in Bundeswehr orders, despite PM Olaf Scholtz’ announcements.

The governmental clearance is a very common practice, as virtually all nations exercise strict control over weapons exports, for reasons of technology protection, global security and diplomacy, but Germany will therefore make things even harder on its own manufacturers: indeed, industries have the ability to skirt them by opening foreign companies and selling through those. The practice is widespread: Technically, the weapons are sold from Italy, Africa, Colombia, Hungary, etc., and not from Germany. By setting up a subsidiary in Italy, Rheinmetall was easily able to skirt the Saudi arms embargo and maintain lucrative ties with its best clients. A similar subsidiary has been set up in South Africa, also with the intended results. Manufacturers will, in all likelihood, no longer be able to use this technique once the law comes into effect.

Qatar knows the loophole

Qatar spends billions to fund its security and diplomacy, through its defense acquisition agency Barzan, which increases investments abroad. Abdullah Hassan Al-Khater, the head of Barzan, states: “There are investments when it comes to defense and security. For example, State of Qatar invests in BMC and we own a big portion of that”. BMC is based in Turkey, a friendly State with whom the governmental holding, owned by the ministry of Defense and run by Khaled Bin Mohammad Al-Attiyah, operates hybrid investments. 

By visiting the Hungarian manufacture, and not the German one, and by sending a low-key delegation with little political exposition, Abdullah Hassan Al-Khater seeks to keep a low profile and not trigger political and civilian opposition to the sale and acquisition, which would also benefit Rheinmetall’s business. It is unclear, for the time being, if Qatar is interested simply in purchasing equipment, or importing the technology and producing on its own soil. The latter option would help Qatar diversify its industry, become a military producer, and acquire imported respectability. This is one of Doha’s main ambitions, and being the first middle eastern country to achieve such a feat would definitely put Qatar on the map of regional powers. Also, this would enable it to circumvent German restrictions, and potential European ones, based on many red flags, ranging from EU parliament corruption to human right breaches.

Will it fly?

If one wants to skirt regulations and breach German policy, this is indeed the best way to do it. Staying off the radar and making no noise was a strategy which worked for years but seems doomed today. Many high-ranking politicians, along with ever-more politically involved society, keep a very close eye on these international dealings. Qatar is known for supporting Hamas, and Berlin is barely able to maintain its business ties, out of need for Qatari gas, and will probably be impacted by this law. Qatar is particularly exposed on the political front, after the EU corruption scandal and strong tensions with Germany during the world cup. Likely to increase the scrutiny: Sven Giegold and his advisors can still remember how German defense firm KMW cut corners through an intermediate company named Qatari MSC in 2013, achieving a large sale of Leopard tanks.

In the aftermath of the Hamas attacks on Israel, several prominent German politicians demanded stricter control over whom Germany does business with: FDP spokesperson Michael Kruse  spoke strongly regarding the German gas deal with Qatar; so it is likely that large weapon transfer will trigger an uproar in the future. The civilian population in Germany is also putting its foot down against the armament industry, as a recent local revolt in Grossenhain showed, hoping to prevent and disrupt the installation and operation of a new weapons manufacture. Finally, NGOs are increasingly watchful: the International Service for Human rights recently published a petition against weapons from Germany and other sources being used in suspected war crimes, signed by nearly 200 NGOs. Spokesperson Nada Awad reported their call for: “Germany […] and other States that authorize the continued transfer of arms[…] to immediately bring an end to such transfers in accordance with their international law obligations, and immediately halt the provision of any materiel […] that may foreseeably be used in the commission of serious international law violations including international crimes”. NGOs in Germany had previously pressured the German government to block the Saudi arms deals, with substantial success.

[Lukas1325, via Wikimedia Commons]

Dieter Müller trained as a telecommunications engineer, before spending twenty years in international high-tech business with European defense groups. In this respect, he spent most of his time between Europe, the Middle East and Asia. His experience gave him the opportunity to take an in-depth look at the issues and players in this sector. The views and opinions expressed in this article are those of the author.

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