It is unclear what, exactly, impresses the Arabs most about the new "Leopard 2" battle tank. Is it its reliable 120-millimeter smoothbore cannon, which remains stubbornly fixed on its target, even when the 68-ton behemoth is traveling at high speeds through the desert? Is it the "increased power-rated additional power generators for check-point missions" touted by the Munich-based manufacturer, Krauss-Maffei Wegmann? Or the "communication interface on the exterior of the vehicle for dismounted forces?"
Surely the arms experts in Saudi Arabia and Qatar appreciate the fact that the new Leopard is equipped with an improved air conditioning system. After all, who wants to see their soldiers being roasted in an armor-plated oven in the desert, where summer temperatures can be as high as 50 degrees Celsius (122 degrees Fahrenheit)?
In the first week of July, Krauss-Maffei shipped one of its new miracle weapons to the Saudi desert to test the Leopard 2 under extreme heat conditions. The Defense Ministry in Berlin sent along an officer with the German Armed Forces, the Bundeswehr, to ensure safety during test firing of the tank's guns.
The successful desert test didn't go unnoticed by the region's sheikhs. The government of Qatar has already shown interest in buying up to 200 tanks, a deal that, should it come to fruition, could be worth up to €2 billion ($2.6 billion).
The Saudis, for their part, have already become loyal customers. Last summer, the German government responded positively to their request to buy up to 270 of the Leopard 2 tanks. But now Riyadh wants more. In a new request, the sheikhs have petitioned the German government for its approval of the purchase of a few hundred "Boxer" armed transport vehicles. Germany's Federal Security Council, which meets in secret, addressed the request last week. The government hasn't issued a decision yet on the deal, which would likewise be worth billions.
German high-tech weapons are a hot commodity among Arab potentates and other autocrats. They haven't failed to notice that the coalition government of Chancellor Angela Merkel's center-right Christian Democratic Union (CDU) and the pro-business Free Democratic Party (FDP) has steadily relaxed Germany's otherwise restrictive arms export policy.
The official (and most recent) Military Equipment Export Report for 2011 shows that business is booming, with arms export permits issued by the German government topping €10 billion for the first time. Some 42 percent of the weapons are destined for so-called third-party states, outside NATO, NATO-equivalent and European Union countries, another number that could very well be record-setting. In 2010, it was just 29 percent.
The numbers suggest that the Merkel doctrine is beginning to have its effect. In accordance with the chancellor's wishes, Germany is now sending soldiers to conflict zones in emergency situations only. Instead, "partner countries" in the affected regions are to be strengthened through arms exports to handle the job of maintaining peace and security on their own.
It's a risky strategy, and it also signifies a substantial departure from the nationwide consensus on German foreign policy. "Even with the benefit of hindsight, Germany's restraint regarding its arms export policy has proven to be the right approach, and we should remain true to it," says former longstanding Foreign Minister Hans-Dietrich Genscher (FDP), something of an éminence grise of German foreign policy.
Big ticket arms items often remain in service for decades. The Leopard 2, for example, was developed in the 1970s and old versions are still in service in many countries. For this reason, the risk is high that armaments could eventually fall into the wrong hands. The Arab spring showed how unstable many of the supposedly stable regimes in the region really are.
The chancellor points out that her foreign policy is "committed to the values" of democracy and human rights. And yet she permits weapons shipments -- in the name of stability -- to unsavory regimes whose human rights records are often appalling.
The body in which these contradictions are occasionally addressed is the Federal Security Council, which holds top-secret meetings at irregular intervals in the small conference room at the Chancellery. Merkel opened last Monday's meeting promptly at 4 p.m.
'Hospitable to Terrorism'
First, two FDP cabinet ministers, Foreign Minister Guido Westerwelle and Development Minister Dirk Niebel, reported on the situation in the troubled West African country of Mali, which has been divided since the military staged a coup in the spring. Then it was Gerhard Schindler's turn to speak.
Schindler, who is president of the Bundesnachrichtendienst (BND), Germany's foreign intelligence service, handed out a folder full of slides and charts. The situation in Mali is difficult, Schindler said, noting that many troops loyal to the government have deserted and the army is demoralized leading to a current inability to pressure the Islamists who have established control of the northern part of the country. "Northern Mali is in the process of becoming a region hospitable to terrorism."
Merkel is a disciplined politician who is almost never quoted using strong language. But when Schindler had finished his presentation, the chancellor exclaimed: "What a crap region."
After the first item on the agenda has been dealt with, the BND president and the intelligence coordinator at the Chancellery always leave the room. When it comes to individual arms exports, the chancellor and the other eight permanent members of the cabinet (ministers of foreign affairs, finance, defense, economics, interior, development and justice, along with Merkel's chief of staff) prefer to exclude other government officials from their discussions.
Only the relevant department head at the Chancellery, the government spokesperson and representatives from the Bundeswehr and the German president's office are allowed to stay in the room. The minutes merely contain rudimentary information on which arms export deals were approved and which ones were blocked.
Two projects that were discussed last Monday afternoon were particularly sensitive. The topic was the Middle East, as is so often the case. Protecting Israel's security is "part of my country's raison d'être," Merkel said in a March 2008 speech to the Israeli Knesset. "For me as German chancellor," she continued, "Israel's security will never be open to negotiation."
Partly as a result, Israel gets nuclear-capable submarines from the Germans, as well as any other weapons it wants. This time the Israelis wanted more modern launchers for rocket-propelled grenades and anti-armor weapons, made by Dynamit Nobel Defence near the western German town of Siegen.
'Now More than Ever'
In its advertising, the company notes that its RPGs can be fired at close range and out of confined spaces, making them perfect for use against Hamas in the Gaza Strip.
The Israeli request was on the Federal Security Council's agenda once before, in June. But the Foreign Ministry and the Ministry for Economic Cooperation and Development had concerns about exporting weapons for urban warfare to a potential combat zone, and the council decided to defer the decision.
Last Monday, with impressions from the most recent Gaza war in their minds, Merkel and her ministers decided to approve the weapons deal with Jerusalem. Germany had to support Israel, "now more than ever," one minister argued, saying that the threat coming from Hamas is serious. The group agreed that the arms shipment should also send a message.
In this context, Westerwelle is the personification of German paradox. Only a week earlier, he had tried in vain to serve as a peace broker between Israel and the Palestinians. And now the same minister was rubber-stamping the delivery of weapons that could be used in the Palestinian conflict.
The second request was even more sensitive. The Saudis are now interested in Boxer armored transport vehicles. Last summer, the news that Germany was willing to deliver up to 270 Leopard 2 tanks to Saudi Arabia triggered fierce political debates in Germany. But the sheikhs are unrelenting. Now they want to buy Boxers, which Krauss-Maffei Wegmann also co-manufactures.
The Boxer is one of the most modern battle vehicles in the world. It can be equipped with a remote-controlled weapons station or converted into a mobile surgical unit. The Bundeswehr uses the Boxer in Afghanistan as an armored personnel carrier. The Saudis need the vehicles for their Royal Guard, which protects the royal family.
Another Strong Year in 2012
The Royal Guard's three infantry battalions are stationed near Riyadh and have thus far had to make due with light weapons and armored vehicles. The addition of Boxers, however, would provide the Guard with international state-of-the-art equipment.
But Boxers are also well suited for suppressing uprisings, particularly because their tires make them useable on roads. Proponents of exporting to Saudi Arabia in the Federal Security Council argue that the tanks are not intended for Saudi Arabia's National Guard, which is responsible for ordinary combat missions. As such, they say, the tanks would only be deployed for reasons of defense.
Yet if the Arab Spring ever came to Saudi Arabia, the Royal Guards would almost certainly be involved, particularly when it came to defending the royal family in an emergency situation. One scenario could involve units loyal to the royal family fighting revolting crowds with German tanks. That was the argument used by German diplomats and the Ministry of Economic Cooperation and Development before the meeting, and it's also the view held by Justice Minister Sabine Leutheusser-Schnarrenberger.
In the Federal Security Council, the liberal justice minister is one of the most vocal critics of arms exports to the Saudis. Last year, she initially opposed Merkel when the Council discussed the Saudis' request for Leopard tanks, but then she deferred to the cabinet's decision. Leutheusser-Schnarrenberger did not attend last week's meeting. Instead, like Finance Minister Wolfgang Schäuble, she sent a deputy, officially because of a scheduling conflict. But ministers can vote only in person.
The Boxer deal would be a lucrative one for the German arms industry, but the companies involved will have to wait. Merkel and her ministers declined to reach a decision during last week's Federal Security Council meeting and have postponed it until next year.
Countries in Troubled Regions
In addition to Saudi Arabia, the United Arab Emirates is the other major importer of German weapons. In the last three years, the German government has approved the sale of about €1.2 billion in German armaments to the UAE.
But Saudi Arabia, the UAE and Qatar aren't the only ones to benefit from the change in German export policy, and indications are that the arms export business remained strong this year as well. Although the government has yet to publish concrete figures, the Hermes export credit guarantees that were approved this year to back arms export deals are one indicator of how strong the business remains.
Six guarantees were approved by the end of November for a total value of close to €3.3 billion. That's already €800 million more than in 2011, says Left Party arms expert Jan van Aken, and the year isn't over yet. And the six guarantees have been issued for deals with countries in troubled regions throughout the world. The biggest recipient is Algeria, followed by Egypt, Israel, Indonesia, Iraq and Pakistan.
The guarantees for Egypt (€700 million) and Israel (€405 million) are especially sensitive. For both countries, the guarantees are intended to secure the purchase of submarines made by HDW in the northern port city of Kiel.
The submarines for Egypt, which are not as technically sophisticated as the ones for Israel, led to a dispute between Merkel and Israeli Prime Minister Benjamin Netanyahu, who would like to block the Egypt purchase. The issue has yet to be resolved, but it is possible that Islamist Egyptian President Mohammed Morsi may soon take delivery of two new submarines.
The Egyptian case illustrates that the Merkel doctrine is in fact a large-scale program to help the domestic arms industry. Western countries, including crisis-stricken countries in the European Union as well as the debt-ridden United States, are radically reducing military spending. Germany's Bundeswehr also has to cut costs. Germany's military, for example, will be buying fewer "Puma" armored personnel carriers. The situation is even worse with the "Tiger" helicopter, with the military canceling half of its original order of 80 units.
Two options remain for the German arms industry, with its 80,000 jobs: Either it shrinks with declining demand, or it develops new markets. But those markets happen to be regions of the world where dictators are at war with one another, religious regimes are funding terrorists or autocrats use violence to suppress their own people. The biggest growth markets are in the Middle East and in the emerging economies of Southeast Asia and South America.
Compared to France and the United Kingdom, Germany is still restrained when it comes to promoting the domestic arms industry. Former French President Nicolas Sarkozy remains the champion of promoters of his own war industry. He is thought to have promised rising nuclear power India a nuclear technology deal as a bonus if it chose to buy French fighter jets. It was an offer the Indians couldn't pass up.
But the Merkel administration is also making inroads in the field of arms sales. "In Germany, we are seeing increasingly intensive political support for offsetting declines in military spending with more arms exports," says Mark Bromley, an analyst with the Stockholm International Peace Research Institute (SIPRI).
The Hermes guarantees are an important tool in the process. They provide financial security to companies engaged in major deals, such as the construction of submarines and frigates. Furthermore, Merkel is now using her trips abroad to pave the way for weapons deals. In Angola, for example, she offered President José Eduardo dos Santos the prospect of an energy partnership. But she also reminded him of the many offshore oil platforms that are largely unprotected. "We would also like to help you with your defense efforts, such as upgrading your navy," Merkel said at an economic conference in the Angolan capital Luanda. Specifically, she was talking about patrol boats for the Angolan coast guard, at €10 million to €25 million apiece.
The government also uses the Bundeswehr for its export offensive. For instance, there has been a "Eurofighter Task Force" in place at the Defense Ministry since 2008. The German Air Force spends more than €20 million in taxpayer money to support the marketing of Eurofighters to India.
Selling the Merkel Doctrine
Two Bundeswehr delegations attended the 2011 International Defense Exhibition (IDEX) in Abu Dhabi. One was headed by the deputy inspector general of the armed forces, and the other by the head of the arms department at the Defense Ministry. The five-day event in the emirate is considered a mecca for the arms industry. The Rheinmetall Group was one of 66 German companies exhibiting at the IDEX, where it exhibited its latest tank, dubbed the "Main Battle Tank Revolution."
The Bundeswehr also supports the industry with decommissioned material, especially the Leopard 2, of which it once had more than 2,100. Of those, some 1,233 have been sold abroad. In the post-Cold War world, Germany plans to make do with only 225 tanks.
Before the mothballed Leopards are sent to their new homes, they are completely refurbished, with the companies doing the work and often making several times as much as the Bundeswehr can collect for its used weapons.
Chile, for example, is getting 172 tanks, for which it is paying the Bundeswehr €46 million with an additional €78.6 million being spent on upgrades. Turkey took delivery of 354 tanks, which were outfitted with new combat technology for €298 million. A similar deal is in the works with Singapore, and Indonesia is expected to follow suit. The government issued a temporary export permit, so that a Leopard could be exhibited at the Indonesian arms exhibition, "Indo Defence," in early November.
Merkel knows that arms exports are not popular. Voters don't like it when authoritarian regimes like the one in Saudi Arabia use German weapons to stay in power. The official explanation that arms deals save jobs doesn't quite hold up with the public. Still, she has moved ahead, hoping to at least convince her global counterparts of the strategy.
She first laid out her approach, the Merkel Doctrine, at an event last September hosted by the Bergedorf Round Table, a venue that has brought together leading international and European politicians for talks on foreign and security policy since 1961. Last month, she presented her strategy to another select group of listeners. The EU and NATO are dependent on other countries, especially emerging nations, taking more responsibility in the future, she said at a conference of senior defense officials in Strausberg near Berlin. "I am convinced that it is in our interest to enable partners to effectively participate in upholding or re-establishing security and peace in their regions," she said.
Ensuring Peace and Stability
The Bundeswehr officers and security experts at the meeting knew exactly what she meant: The government is to supply weapons to regions of potential conflict, like the Middle East and Southeast Asia, and countries in those regions will then use those weapons to ensure peace and stability.
From the standpoint of the chancellery, two problems can be solved with this doctrine. On the one hand, it justifies arms exports to regions like the Arabian Peninsula, which have long been controversial. On the other hand, it provides the government with a better justification for Germany's reluctance to get involved in conflicts overseas.
And Merkel no longer wants to be responsible for major overseas military missions. She sees Afghanistan as proof that interventions in foreign countries usually fail. In the chancellor's opinion, it is better and less dangerous to provide military support to one side in a given conflict.
Algeria is one of these strategic partners. The North African nation borders two countries that have descended into chaos, Mali and Libya, and it is now expected to serve as a bridgehead in the fight against Islamist terrorists. Algerian intelligence has infiltrated al-Qaida in the Islamic Maghreb (AQIM) on a large scale. The United States also wants to use the former French colony as a base for its counterterrorism efforts.
It's no accident that Algeria has become an increasingly important beneficiary of German export permits, with the autocratic country ranking eighth in 2011. Algeria finances its extensive arms deals with oil and gas revenues.
Two companies have played a major role in the arms buildup in Algeria. The country has ordered frigates from ThyssenKrupp Marine Systems. And Düsseldorf-based Rheinmetall is building a factory to produce Fuchs armored personnel carriers under a licensing agreement. According to the German Economics Ministry, up to 1,200 units will be built at the plant. By comparison, the Bundeswehr owns significantly fewer than 1,000 such vehicles.
Israel and the Submarine Deal
The North Africans recently laid out another, large piece of bait on the international market: the $1.5 billion contract for a modern border control system for the border with civil war-plagued Mali. The project will likely be of interest to Europe's EADS defense company, which is building a similar system in Saudi Arabia. The German government is participating in the deal by providing trainers for Saudi border guards.
But strategic partners can quickly becoming destabilized and unpredictable, as the example of Egypt illustrates. Last year, Cairo submitted an official inquiry to Berlin asking whether it could buy two submarines from Kiel-based HDW. The Egyptians were not inquiring about the nuclear-capable Dolphin-class submarines, which Germany supplies to Israel. They were interested in two vessels in the technically less sophisticated 209 class.
At first, the deal looked to be both economically lucrative and politically uncomplicated. German Defense Ministry officials checked with the Israeli Defense Ministry, and the chancellor called the Israeli premier. There were no objections. On Nov. 28, 2011, the Federal Security Council gave the go-ahead.
But the situation in Cairo has changed dramatically since then. The new president, Mohammed Morsi, comes from the Muslim Brotherhood and has close ties to the Islamist group Hamas. His party has developed a draft constitution that, like the one under deposed dictator Hosni Mubarak, names Shariah law as the basis for all legislation. And in Jerusalem, the Egyptians are no longer seen as trusted allies in the region. The submarine deal is now a problem.
Through his spokesman, Netanyahu issued a demand in the press that the deal be canceled, and Vice Prime Minister Silvan Shalom said that "we agree that we don't agree." Irritated by the Israelis' sudden about-face and the unexpected pressure from Netanyahu's staff, the Chancellery assured the Israelis that it would review the decision. In last Monday's Federal Security Council meeting, Westerwelle complained that Berlin shouldn't make its position completely dependent on that of Israel. But no matter what Berlin ultimately decides, it will alienate one important partner in the region, either the Israelis or the Egyptians.
Germany's arming of the United Arab Emirates has been uncomplicated by comparison, and very lucrative. The government in Berlin tends to counter political objections with the argument that the country has to be strengthened militarily against Iran. And with such political backing, it is little wonder that the Emirates have become a favorite customer of the German arms industry. Rheinmetall, for example, has not only sold the country 27-mm light naval gun systems, but also in recent years built the UAE's first munitions factory. It is located in the military town of Sayid and now offers its deadly products for export in the Middle East.
Questions from German Allies
The plant is owned by Burkan Munitions Systems LLC, of which Rheinmetall owned 40 percent until the beginning of this year, when it sold its stake. Rheinmetall also plans to build a modern, computer and laser supported combat training center in the Emirates by 2014.
Rheinmetall told analysts that it expects the training center to generate revenues of more than $100 million. Once the center goes into operation, the country's armed forces will be brought up to a level of technical expertise in computer and laser supported combat similar to that of the Bundeswehr.
Given the controversy which generally surrounds arms exports in Germany, the government is still hesitating to actively promote its new policy. The chancellor and her advisors do believe it is advisable to at least explain the outlines of the new security doctrine, and Defense Minister Thomas de Maizière also supports a bolder approach. "In effect, markets and sales opportunities for armaments are expanding," he says.
But neither Merkel nor her defense minister is being more specific. Both insist that the discussions and most of the decisions of the Federal Security Council remain secret. Officially, the government isn't commenting on the tank deliveries to Saudi Arabia.
If it were up to Foreign Minister Westerwelle, the government would only issue platitudes on the subject. Westerwelle is working untiringly, though unsuccessfully, on his image as a proponent of disarmament policy. After the re-election of US President Barack Obama, he said: "I hope that we can make progress together on disarmament and nuclear non-proliferation."
But when the public isn't paying attention, Foreign Minister Westerwelle acts as a promoter of the German arms industry. He has in the past advocated arms shipments to Russia and Egypt in the Federal Security Council. Merkel, by contrast, was hesitant. But the foreign minister doesn't want to explain his position to the public.
For the opposition, the government's silence presents a big opportunity. The Greens, for their part, campaigned for a tightening of arms export rules some time ago. They also want the Federal Security Council to become more transparent. "An arms export law must define certain disclosure requirements, which also apply to the Federal Security Council," Green Party parliamentary floor leader Jürgen Trittin said in a recent interview with SPIEGEL. "That would finally result in standards."
Even the center-left Social Democratic Party (SPD), despite its ties to heavy industry, seems to support a restrictive approach. "We must contribute to the prevention of new arms races," says longstanding former Development Minister Heidemarie Wieczorek-Zeul. "It's a question of Germany's credibility in foreign policy." The SPD candidate for chancellor in next year's general elections, Peer Steinbrück, has also called for a more restrained arms export policy.
Ex-SPD Chancellor Helmut Schmidt is also highly critical of Merkel's new approach. The Saudis showed interest in Leopard tanks way back in his tenure (1974 to 1982) as well, and the arms industry was exerting a lot of pressure. The counter-arguments from back then are still valid today: Bonn did not want to provide an autocratic regime like the Saudis with the means to crush an uprising by their own people.
The Germans also didn't want to add additional fuel to the Middle East conflict, a policy from which Genscher derived the principle that "anything that floats is okay" -- in other words, Germany could only export ships, because the Israelis and their neighbors were at war on land and not at sea.
But Schmidt is also outraged over the submarine sales to Israel, whose policy toward the Palestinians he has sharply criticized for years and characterizes as "responding to terror with their own terror."
A Greater Role?
Schmidt fears that by approving the submarine deal, Merkel is providing the hardliners in Jerusalem with the ultimate military support for their settlement policy. In critical remarks about Merkel in the spring, he said that he would not have approved the arms shipments to Saudi Arabia or Israel. "I wouldn't have done it," he told SPIEGEL. Weapons should be exported only to allies, Schmidt explained, and neither Israel nor Saudi Arabia is a German ally.
The German position has also raised some concerns among Berlin's own allies. Since their refusal to politically and militarily support the war waged by the West and its Arab allies against former Libyan dictator Moammar Gadhafi, the Germans are seen as shirkers.
Some say this openly, and point out that Germany, as a strong economic power, has great influence. "Why doesn't Germany agree to do more in other areas?" asked former French Foreign Minister Hubert Védrine, an advisor to Socialist President François Hollande. "I really don't see what prevents Germany from playing a greater role in international politics and military missions."
But the arms shipments to Saudi Arabia are a bigger problem for Merkel, because no Western diplomat can truly assess how stable the situation is there. The government, which is fundamentalist by Western standards, is threatened by even more extreme forces. If the situation there is less stable than analysts with the intelligence services and foreign missions suggest, tanks and other German weapons could fall into the hands of an extremely anti-Western movement.
This sort of development has a precedent in the immediate vicinity. For decades, the pro-Western regime of Shah Mohammed Reza in Iran enjoyed generous support from the United States. When the Iranian revolution swept away the authoritarian ruler in 1979, the American weapons were suddenly in the hands of the ayatollahs, who now saw Washington as their biggest enemy.
BY KONSTANTIN VON HAMMERSTEIN, RALF NEUKIRCH, GORDON REPINSKI, HOLGER STARK, GERALD TRAUFETTER and KLAUS WIEGREFE