Thomas Müller has something to say about what happens when questions of morals dominate politics. He's the CEO of Hensoldt Holding GmbH, a defense industry company based in the village of Taufkirchen, near Munich. Overall, the company is doing quite well, with 4,400 employees around the world. But several deals have recently fallen through. One with Airbus Helicopters, a manufacturer based in Marseille, France, for instance, is currently on the verge of collapsing.
The French wanted to install the German company's missile-warning system in 23 helicopters ordered by Saudi Arabia, but would now likely prefer to purchase the technology from Saab. To the French, the Swedish manufacturer seems more reliable. The result being that an eight-figure deal could fall apart for Hensoldt.
"Our employees no longer understand the world," says CEO Müller. Foreign manufacturers, he says, are increasingly turning their backs on German components out of concern over Germany's strict export policies. Müller has lodged a complaint in response with the responsible ministers in the German government. He believes they are to blame for the problem, and argues that Germany is now considered a country with which one no longer wants to do business in the defense sector.
The reason is a moral decision made by the German government this past November, when it made the decision to stop exporting all military equipment to Saudi Arabia. The move came in reaction to the murder of Jamal Khashoggi, a journalist who had been critical of the Saudi government. The ban on exports recently got extended until March 9.
It's one thing to make a decision based on moral values; it is another to make one based on political pragmatism. But when these choices collide, despite the best of intentions, they can prove to be irreconcilable.
In pragmatic terms, Germany is an important country for the defense sector. Based on 2014 numbers by the Wifor Institute, a German economics research institute, the industry employs 136,000 people and creates a direct gross value added (GVA) of 12.2 billion euros. The sector isn't huge. Only four German companies count among the Top 100 firms in the field, but their products are valued internationally, because they are made by highly skilled workers, often in small- to mid-sized businesses. Last year, the German government approved arms exports worth 4.8 million euros.
Another realpolitik consideration is the fact that other European countries have embarked on collaborative arms projects with Germany as a partner. Now, the products of those collaborations, which were to be exported to Saudi Arabia, are on hold. Germany, which is fond of seeing itself as the motor of the European Union, is sticking to its ban, and in doing so, is showing little regard for its European partners.
Division Within the Government
Germany's coalition government, comprised of the center-right Christian Democratic Union (CDU), its Bavarian sister party, the Christian Social Union (CSU), and the center-left Social Democratic Party (SPD), is stuck in a catch-22 between morality and realpolitik, and there doesn't appear to be an easy way out. In response, Chancellor Angela Merkel of the CDU and Vice-Chancellor Olaf Scholz of the SPD agreed to extend the arms moratorium against Saudi Arabia for at least two weeks -- an extension spurred by perplexity.
The continued stalling underscores how difficult it has become for the two partners in the governing coalition to compromise on fundamental issues. Usually, they don't even try anymore. When it comes to issues like the basic pension, which would raise the amount paid by the social security system to those who receive the smallest retirements, climate protection laws and the maximum tax rate, the approach is always the same: The SPD formulates a clear, but radical plan, and the CDU angrily rejects it.
When it comes to the arms exports, it is the Social Democrats who categorically invoke morals, at least outwardly. They know how popular their position is. Who, after all, wants to oppose calls for a cessation of the use of German weapons in wars? "Our principles are the consequence of German history and our convictions that support a pro-peace policy," says Rolf Mützenich, the deputy head of the SPD parliamentary group in the Bundestag, Germany's federal parliament. Mützenich is considered a moderate when it comes to foreign policy, and the only issue on which he is unwavering is the arms-export ban. He says he would prefer to completely ban the export of weapons into war zones.
After Merkel's first attempt at assembling a coalition government failed in the autumn of 2017, Mützenich succeeded in pushing through an arms embargo against countries involved in the war in Yemen in preliminary talks to form a government between the CDU and the SPD. The country has become the site of one of the biggest humanitarian disasters of our time. Saudi Arabia is leading a military alliance against the Houthi rebels in Yemen, and countless civilians have been killed in Saudi air raids. Riyadh's intervention has also led to famine in the country.
In the final coalition negotiations that followed, more pragmatic members of the SPD managed to soften the provision a bit. Some, including Manuela Schwesig, the governor of the state of Mecklenburg-Western Pomerania, would have preferred to have striken the formulation entirely. The Lürssen shipyard group is manufacturing patrol boats for the Saudis in her state, and the embargo has put hundreds of jobs at risk.
At the end of the coalition negotiations, the decision was made to "no longer approve any export sales to countries as long as they are directly involved in the war in Yemen." Nevertheless, some exports continued to get approved until this autumn. It was only after Khashoggi's murder that a total embargo got imposed.
A Popular Ban
On Wednesday evening, Sigmar Gabriel sat on a podium in a ballroom at the Bavarian Academy of Sciences in Munich and explained the new state of the world to a crowd of several hundred people. That evening, the former head of the SPD, ex-vice-chancellor and foreign minister played the elder statesman. But he also showed that he has retained his instinct for channeling the mood. He received the most enthusiastic response when he began speaking about the dispute over the export ban.
"If a blank check has to be signed for export opportunities all over the world, then there will be no joint arms production with France," Gabriel said to the audience's applause. He accused the conservative Christian Democrats of defending the interests of the German defense industry under the smokescreen of German-French collaboration. "My suspicion is that people want to seize the moment here to push through their own economic interests," he said. He claimed not to understand why people, when asked what holds Europe together, bring up the military, and why they say things like, "Europe will fail if we as Germans are not willing to export weapons as the French want us to."
Many within the SPD agree with Gabriel. They also know that most Germans share this view. Two-thirds of Germans reject arms exports as a matter of principle, and about 80 percent are opposed to arms exports to crisis regions. For the Social Democrats, the issue has arrived at a welcome time, since the party is still trying to redefine itself on various levels, while at the same time sharpening its appeal to the left. The party is keen to revive its old legacy of pro-peace policies to help mobilize voters in the run-up to the European and state elections.
"Saudi Arabia doesn't need any German weapons," argues Martin Schulz, who ran against Merkel as the SPD's chancellor candidate in 2017. "So long as the country tramples human rights and wages war in Yemen, there is no reason to reconsider the export ban." Schulz believes it is "nonsense" that Germany needs to loosen its rules for the sake of European cooperation. Instead, he says, Berlin should be seeking to convince partner countries to abide by the same hard rules: "No weapons to countries where there is a civil war and none to dictators."
The Social Democrats are also pointing to a common position on military exports agreed to by EU member states in 2008. In it, EU member states agreed to take the human rights situation and security in the region into consideration before exporting military technology and equipment. Several lawmakers in the European Parliament are asking for this agreement to be made legally binding. Their hope is that this would make weapons deliveries to Saudi Arabia a moot point.
Other European countries are nonetheless continuing to deliver arms to Saudi Arabia, for both economic and political reasons. They don't want ties to the Saudi regime to be completely severed, and they view arms exports as a way of exerting foreign-policy influence.
That helps to explain why officials in Britain and France are becoming increasingly baffled by Germany's tough stance. When Angela Merkel was recently in Egypt for a summit between the EU and the Arab League and met British Prime Minister Theresa May for breakfast, they didn't just talk about Brexit. Members of the delegation reported that May also spoke about the blockade of arms exports. When Merkel visited French President Emmanuel Macron on Wednesday, the extension of the arms embargo was also raised. At the moment, about 50 contracts by French companies cannot be fulfilled because of the unfulfilled deliveries by German companies.
'Common Culture of Arms Exports'
At issue are components for military equipment manufactured in Germany and delivered to Britain or France, where they are incorporated into final products destined for Saudi Arabia. There's a lot of money at stake.
Components like the electrical switches Würth is meant to supply to France for installation in ambulances. The deal, which has been suspended by Germany's Federal Office for Economics Affairs and Export Control, is worth only 900,000 euros. The Baden-Württemberg-based screw manufacturer has nonetheless appealed the agency's decision.
At issue is also radio equipment supplied by Rohde & Schwarz in Munich that is to be installed in Eurofighter jets in Britain before shipment to Saudi Arabia. That deal is worth 23 million euros.
There's also a border-security system Airbus, the aerospace and defense corporation, produces for the Saudis in a deal worth 950 million euros. Hensoldt Holding GmbH is also a partner in the deal, supplying the radar systems. It also contributes components for the Cobra weapon location radar, which is already packaged and waiting in the port for shipment.
Müller, the Hensoldt CEO, says people are now using the term "German-free" to advertise their products at defense trade shows. He's afraid his company may soon lose Airbus as a customer. "I couldn't even be upset with the Airbus people about it," he says.
At meetings in France, he says he encounters frank incomprehension. People talk to him about how the German government is constantly emphasizing the importance of European industrial and defense policy. "And then you get on such a high moral horse and deny your partners in the EU support in supplying defense armaments components."
Angela Merkel knows the industry's arguments, and she also plays the European card in public. In view of the Americans' withdrawal, she says, Europe must harmonize and strengthen its security and defense policy. A "common culture of arms exports" is needed for that to happen, the chancellor said in her recent speech at the Munich Security Conference. "We cannot talk about a European army and a common arms policy or arms development if we are not prepared at the same time to pursue a common arms-export policy."
France and Germany have taken a first step in that direction with the Aachen agreement signed last month. In a secret amendment agreement , the two partners agreed they would respect the de minimis principle. Under the provision, no party may prohibit the supply of a component in the future if its value remains "below a certain percentage" of the total transaction. It has not, however, been specified what that percentage would be.
A Party at a Crossroads
Since the approval of the agreement by the coalition government, the assumption among Merkel's conservatives has been that the SPD would at least allow the export of the components in question that Britain and France need to finally deliver their products. But even if the SPD were to yield on this front, the underlying question still hasn't been clarified. How does the SPD aim to position itself on the issue? As a European party that is willing to compromise or as one that wants to impose its high moral standard on the rest of Europe -- and, in case of doubt, insist on a special status for itself at the national level?
"Given that the process of European integration is currently under massive attack, I find an attitude that gives European partners the cold shoulder counterproductive," says Markus Kaim, a political scientist at the German Institute for International and Security Affairs (SWP), a respected think tank in Berlin. He recommends framing the question of arms exports in strategic terms rather than viewing it as a "moral instrument." "What do we want from Saudi Arabia? What direction should the country take in its development?" he asks.
Merkel's conservatives are irritated by the SPD's stubbornness. "If we continue to have problems with every last switch, there will be no joint defense projects with France," says Gunther Krichbaum, the chair of the European Affairs Committee in the German parliament. "If we want a European arms and defense policy, then we have to be able to make compromises. We don't have to give up our standards, but we do need to rethink them."
There are also rumblings in the business-friendly wing of Merkel's conservatives. "We must end the moratorium on Saudi Arabia as soon as possible," says Joachim Pfeiffer, the business-policy spokesman for the conservatives' parliamentary group. Parliamentary group leader Ralph Brinkhaus says, "Europe must work together even more closely on defense policy to strengthen the European pillar in NATO." In addition, he argues, the member states need to "work toward uniform European rules on arms exports."
A Strong Negotiating Position
As a party, the SPD know that they're in a strong negotiating position. Because even if Merkel's government were to collapse, given the other option available for forming a government, the conservatives would still likely be alone in their pragmatism. The Green Party, after all, would also likely insist on strict limitations on arms exports.
During Merkel's attempt to form a coalition government with the Greens in 2017, arms exports already emerged as a point of contention. "We had negotiated a complete stop to arms exports to Saudi Arabia," says Agnieszka Brugger, deputy head of the Green's parliamentary group. But the third party in the talks, the business-friendly Free Democrats, broke off negotiations before a government could be formed.
The conservatives now fear the SPD could campaign on the issue in upcoming state elections in Germany. "It would be a shame if the Social Democrats made arms-export policy a campaign issue," says Marco Wanderwitz, a senior official in the German Interior Ministry. "If the SPD were to reposition itself at this point, it would become even more alienated from the conservatives. You have to remind your coalition partner that politics consists of compromises."
Whether that compromise takes shape now lies in the hands of Heiko Maas of the SPD, who is likely the most conflicted over the need for a morally reconcilable but also pragmatic policy. As foreign minister, he has an interest in ensuring that Germany doesn't take a special path in Europe without coordinating with its partners. At the same time, he also understands his party's sensitivities.
His hope so far has been to keep his coalition partner at bay. When Maas met with representatives of the CDU-led Economics Ministry and the Chancellery in December to extend the export moratorium, he referred to the peace negotiations in the Yemen conflict, which were starting in Stockholm. He argued that if Saudi Arabia and its allies in the war were to negotiate a cease-fire with the rebels, then this could be used as a reason to at least allow the arms exports that had already been approved. He said the moratorium could be extended by two months until that time.
But the foreign minister's calculations didn't pan out. At the moment, a fragile cease-fire is prevailing in Yemen, and little progress has been made on a planned United Nations observer mission to ensure the transport of aid. Maas will likely have difficulty convincing his fellow party members to shift course.
A few months ago, when he justified the export permit for patrol boats to Riyadh in the parliamentary group, it irritated other members. "This has to be the last time," Martin Schulz reminded the foreign minister.
But it's safe to assume it won't be.
By Matthias Gebauer, Valerie Höhne, Christiane Hoffmann, Martin Knobbe, Veit Medick, Peter Müller, Ralf Neukirch, Christoph Schult and Gerald Traufetter