German arms export policy: compensation to Ethic?

In the final section of Politics as a VocationMax Weber, the famous German sociologist, philosopher, jurist, and political economist, describes the “politician”. His main point is that the politician needs to balance an “Ethic of Moral Conviction,” with an “Ethic of Responsibility.”

 

The « Ethic of Moral Conviction » refers to the core and unshakeable beliefs that a politician must hold. « The Ethic of Responsibility » refers to the day-to-day need to use the means of the State in a fashion which preserves the peace and the wealth for the greater good.

 

In that regard, Berlin’s decision to halt defence exports to Saudi Arabia, following the war in Yemen and the killing of dissident journalist Jamal Khashoggi, can be considered as an unbalanced – and thus – irresponsible “Ethic of Moral conviction”, putting at risk hundreds of jobs in cash-strapped regions.

The German export policy: ravages of the “Ethic of Moral conviction

In pragmatic terms, Germany is an important country for the defense sector.

Based on numbers by the Wifor Institute, a German economics research institute, the industry employs 136,000 people (+ 273,400 indirectly) and creates a direct gross value added (GVA) of 12.2 billion euros. The sector isn’t huge, but its products are valued internationally, because they are made by highly skilled workers, often in small- to mid-sized businesses.

 

The best-known example is the Lürssen shipyard at Wolgast, which clinched a mega-contract in 2013: 146 boats, ranging from 15m to 82m. From 2015 to 2018, the privately-owned shipyard has produced and delivered 15 patrol boats out of an order of 33. 16 must still be approved for export, including 7 already-produced patrol boats (see picture, left) but docked, waiting for their unlikely delivery…

Facing the embargo, Lürssen had been scaling back production in anticipation of an embargo and then announced it had fully suspended the work in the Peene shipyard in Wolgast.

The real issue is no more facing a tough dilemma – whether to follow its moral instincts or pursue a realpolitik-led agenda of arms sales out of economic interest – but, now that the decision to stick to moral principles has been taken and tends to become a permanent regime, how will the German Government offset and smoothen the disastrous consequences of its policy?

The German export policy: “time for an Ethic of of Responsbility”!

So far, apart from discussions and official words, no compensation has been recorded.

Even the Green leaders, Katja Keul, a lawyer and a specialist of defence issues, veteran Jürgen Trittin, former MP and speaker for foreign affairs of his party, pleaded for a fair compensation to the embargo when they both visited Wolgast last January.

In the famous press-conference attended by high civil-servants from the Defence, the Industry (responsible for export policy) and speaker for the Chancellery, which took place on the 29th of March, this year, two days after the new ban, the official speaker for Mrs. Merkel, Mrs. Ulrike Demmer, proposed two solutions : either the production is allowed but not the delivery, waiting for better circumstances or the already-produced patrol boats will be delivered to another customer, German or foreigner ( “:Die Bundesregierung arbeitet daran, eine Schadensminderung zu finden. Dazu gibt es diverse Möglichkeiten: Entweder, man ermöglicht den Bau, ohne sie derzeit auszuliefern, oder aber, die gebauten Boote werden für eine inländische Nutzung zur Verfügung gestellt.”

Negotiations should have been delayed or postponed: the fact remains that on the 17th of May, Lürssen, albeit being a a very discrete company, announced that it will sue the German Government. The Bremer group complains because of the export stop for patrol boats of their Peene shipyard in Wolgast against the Federation. It is all about claims for damages in the millions.

So far, also, despite words, no compensation has been agreed to offset the damages due to the embargo. Neither a sum has been discussed (we heard sums around € 562 millions being claimed by the industry) nor domestic orders have been recorded to replace the end-user, the Saudi Border Coast Guards.

Mrs. Merkel has simply forgotten the lessons from Max Weber: a balance between tow ethics, to retain only one, the conscience without any compensation…

Time for Realpolitik: domestic orders to truly German industrialists!

Unless the German Government has decided alone to get rid of the German defence industry, it should offset the prejudice it caused to the sector.

How? By leading a dynamic policy of national orders. 

In that sense, Mr. Gabriel, as Vice-Chancellor and Minister for Economy & Industry (2013-2017), had more common sense that the current Government when he pleaded for two policies to compensate for the restrictive export policy he led: consolidation of national companies to lead to a critical size by domain, and national orders to feed these new groups of merged companies.

If consolidation is the sole prerogative of the companies, the Government is nevertheless responsible for the national procurement policy. The newly-appointed defence Minister, Ms Kramp-Karrenbauer, insisted in July and early September that Germany needed to be on a “path of constantly and reliably rising” spending out to 2024. She said it was not about “other people’s demands of us”, in an oblique reference to US President Donald Trump, and about “rearmament”. “It’s about ensuring that the Bundeswehr has enough equipment and personnel.” Kramp-Karrenbauer said the draft budget of 44.9 billion euro ($49.4 billion) for the defense ministry in 2020 – an increase of 1.7 billion euro ($1.87 billion) – was “good news.” But, she added, the increase would not be enough to fund projects.

The latest budget increase will lift defense spending from 1.2 to 1.37 percent of the country’s GDP – still well below the two percent of GDP which NATO allies agreed in 2014 they would aim to reach by 2024. In fact, current finance ministry projections forecast the defense budget to drop rather than increase, dipping to 44 billion euro ($48.4 billion), or 1.24 percent of GDP, by 2023.

In the context of a small hike in defence budget (which will go first to Soldiers and to their small equipments) and of the current restrictive export policy, it is all the more important that the procurement budget is massively directed only to truly-German consortiums battling for domestic orders such as the new air defence system (or TVLS) or the future heavy MKS-180 frigates.

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