Euro-Gulf Information Centre

The Withering of German-Saudi Relations?
 

On May 25, the international press reported the decision, taken by Saudi Crown Prince Mohammed bin Salman, to halt the granting of all government contracts to German companies. This is likely to substantially impact the German economy as Saudi Arabia is a significant trade partner for Berlin—which exported some €6.6 billion worth of goods to Riyadh in 2017 alone. In particular, major German companies such Daimler, Bayer, Boehringer Ingelheim and Siemens stand to be affected. Last year, for instance, Daimler secured an order for 600 buses from Saudi Arabia’s main bus operator, SAPTCO, and Siemens was awarded a $400 million contract for five gas turbines destined to a combined heat and power plant being built in the Kingdom. Even Deutsche Bank, an institution that has several operations in the Kingdom, including a potential role in the historic initial public offering (IPO) of the energy major ARAMCO, could be impacted. However, even before last week’s decision, German companies had already been subjected to added scrutiny when applying for Saudi tenders and a few German applications had already been suspiciously rejected.

 

In fact, the Crown Prince’s decision is the latest event in a string of pressure-points between the two countries—signaling Saudi Arabia’s irritation over Berlin’s foreign policy in the Middle East. Last year Saudi Arabia summoned its Ambassador to Germany home for consultations over critical comments by (then) Foreign Minister, Sigmar Gabriel, about the political crisis in Lebanon. In November 2017, the German Minister had made an indirect accusation against the Kingdom stating that Europe ‘could not tolerate the adventurism that has spread’ in the Middle East, with a reference to the Yemen war and the Qatar crisis. Indeed, Gabriel took a controversial stance in the (June 2017) crisis between Qatar (on one side) and Saudi Arabia, Bahrain, Egypt and the United Arab Emirates (UAE) (on the other). From Berlin’s perspective, the Qatar crisis constitutes an unnecessary complication and distraction for what should be a unified front in combating violent extremism, a goal that is deemed as an absolute priority. Saudi Arabia, instead, argues that the measures taken against Qatar would be part of its policy confronting extremist groups, as the Saudi leadership accuses Doha of supporting extremism. Nearly one month after the GCC’s diplomatic row erupted, Gabriel visited Saudi Arabia, the UAE, and Qatar, to encourage the parties to move toward a settlement. Soon after, Gabriel appeared in a joint press conference in Doha with his Qatari counterpart, stating that the sovereignty of Qatar must be respected, and hailed Doha’s management of the crisis. Such stat