Germany: a suicidal export policy

Back to back, the German government has shown its intention to curb drastically the weapons exports by hardening its export policy:

First, the annual Weapons Export Report registered a 23% drop compared with 2017 according to media sources.

Then, it publishes the new guidelines for weapons export policy, updating those released in 2000.

The government says the decrease is a sign of Germany’s « restrictive and responsible weapons export policy« ; the industry replies it is the beginning of the decline of the German defence industry.

Defencechronicles makes the point.

German export policy in 2018: the beginning of the decline

 

Three clear signs of decline in 2018:

 

  • in volume: the report states that the German government approved a total of 11,142 weapons export requests, representing some €4.82 billion ($5.44 billion) in sales — a 23% decrease from 2017.

 

Cleared export licences authorizations 2018 2017 2016 2015 2014
€Bn 4.8 6.242 6.848 7.859 3.961
Number of licences 11.142 11.491 12.215 12.687 12.090

 

Years/regions EU NATO & allied Third countries Total
2014 817 753 2.404 3.961
2015 2475 763 4.621 7.859
2016 1.353 1.827 3.668 6.848
2017 1.483 965 3.795 6.242
2018 1.053 1.221 2.550 4.824

 

  • In geographic areas:

 

⇒ 47.2% of the exports went to the EU, NATO and NATO-allied countries (Australia, New Zealand, Japan and Switzerland), or some € 2.274 Bn, less than reported in 2016 (46.4%) or in 2015 (41%);

⇒ The majority of the sales are still focused on third countries: 60?8% in 2018, a figure which is stable over the years (60,8% in 2017 and 61% in 2015). So-called ‘third countries’ were the recipients of €2.5 billion worth of arms, down from €3.8 billion in 2017.

Of those countries, Algeria was the largest customer, purchasing some €818.2 million worth of hardware.

Though arms sales to Saudi Arabia remain highly controversial, in 2018 the kingdom bought some €416.4 million worth of German weaponry, namely patrol boats and artillery positioning radar equipment. Germany currently has an export ban for Saudi Arabia, though there are some exceptions.

Germany also exported some €365.7 million worth of arms to ‘developing countries’. Pakistan led the list of recipients in this category with a total sales volume of €174.4. It was followed by neighboring India with €96.8 million, and Indonesia with €21.2 million.

 

Countries & rank Amount of licences authorized Main equipments cleared

Turkey

€ 242.8 millions Kits for U-114 and egines for MBTS

Arabie

€159,8 millions Patrol boats and radars

Singapour

€55 millions U-218 SG, Leopard 2A7

Suisse

€41.1 millions Radars & helicopters

Roumanie

€36.8 millions Anti-tank missiles

Israël

€ 23.4 millions Naval boats& U-Boats

 

In deliveries/exports (Ausfuhr von Kriegswaffen)

 

  • In 2018, the volume of deliveries (or real exports) represented €771millions, or 0,06% of German exports: 61% of these exports have been delivered to EU, NATO or NATO-allied countries;
  • In 2017, this volume was bigger: €2.65 milliards € (0,21% of German exports); in 2016, €2.50Bn.

 

Year € M % in German exports
2003 1.332,8 0,20
2004 1.129,1 0,15
2005 1.629,7 0,26
2006 1.374,2 0,15
2007 1.510,1 0,16
2008 1.427,2 0,14
2009 1.338,8 0,17
2010 2.119 0,22
2011 1.284,7 0,12
2012 946 0,09
2013 933,2 0,09
2014 1.823,1 0,16%
2015 1.55 0,13%
2016 2.501,8 0,21%
2017 2.651,7 0,21%
2018 771 0,06%

German export policy & 2019: the first purely « ethical » year ?

 

German exports also decreased again in the first quarter of this year — a decrease of 7.4 percent from the same point last year. The German government approved arms exports worth €1.12 billion ($1.3 billion) in the first quarter of 2019.

 

  • The value is a 7.4 percent decrease from the same period in 2018 and €100 million below last year’s quarterly average. The industry last reported an increase in 2015, when it recorded exports of €7.86 billion.

 

  • Among the 20 main customers cited by the ministry, none are directly involved in the Yemen war. The German government partially banned exports to countries involved in the war in Yemen. That ban was further tightenedin November following the murder of journalist Jamal Khashoggi in the Saudi consulate.

 

  • The ban only applies on new orders, not those already approved, but Germany is pushing to ban domestically produced arms from being used.

 

The ministry attributed the drop to a « restrictive and responsible arms export policy, » adding that the human rights situation in the importing country played and will continue to play « a prominent role in the decision making process« .

The new guidelines for the German export policy

 

Last week and after months of struggle (actually, the Union and the SPD wanted to submit by the end of 2018, new export guidelines. After the Failure of this schedule, German Chancellor Angela Merkel promised in December in the Bundestag until mid-2019 to an agreement), the German Government has agreed to tighten up the almost 20-year-old guidelines for the Export of armaments: the draft resolution of the Ministry of economy has been adopted by the Cabinet.

The new policy is based on the existing guidelines from the year 2000, which were decided by the red-green government under Chancellor Gerhard Schröder.

The now restrictions relate to the following points:

⇒ “The Export of small arms to third countries should in principle not be approved”, – stated in the new export guidelines. This tightening was the SPD is particularly important. Small arms such as machine guns or bazookas are considered to be the most deadly weapons in conflicts. Last year, their export to third countries has been approved outside of Nato and the EU by the Federal government. The value of approved exports in this area fell by 97 percent from 15.1 to 0.4 million euros;

 

⇒ The control of the fate of the exported weapons will be exacerbated. Especially the risk of a further spread in areas of conflict should be reduced. “If there is any doubt on the backed up End-user the end-user, be Export rejected”, – stated in the guidelines;

 

⇒ The export of technology for production sites abroad, should be more closely controlled. In future it should be carefully examined whether “the structure of foreign armor, and allow production, in accordance with the principles laid down restrictive arms export policy of the Federal government”.

German export policy and its side-effects in chain

 

On diplomacy: the ineluctable decline of the German diplomacy in several parts of the world

 

While most of the countries over the world rely on defence exports to consolidate their positions in target-countries, the German Government considers on the contrary that exports of military equipment are not an instrument of economic policy and of diplomacy, and for this particular reason, impose particularly strict rules on itself in this sensitive area and pursues an extremely restrictive licensing policy.

If ethical, this position is by no means in the long-term interest of Germany. Restrictions may harm German foreign policy. Its unpredictable arms export policy of Germany made of freeze, ban and exceptions, has damaged its global diplomatic positions. No longer viewed as a reliable partner, influential countries have turned their back to Germany and open their doors to new exporting countries (South Korea, Turkey, China, Russia, Israel…).

Germany is wrong when she thinks that defence exports are not a pillar of diplomacy. Selling U-Boats, frigates, MBTs or fighters creates links between seller and customer which last almost three decades. Support, common maneuvers, updates and upgrades forge a powerful link, which ease the partnership in other domains and, to say it bluntly, far better means of pressure than the ban or the freeze…

 

⇒ This restrictive policy is a diplomatic suicide.

 

On co-operation…: unreliable and unpredictable partner

 

Germany’s unpredictable arms export policies and long wait times for export licenses also threaten the future of big European projects to develop new tanks, combat jets and drones. Germany’s latest restrictions on arms exports risk making Berlin a pariah in Europe’s defense industry, threatening future collaboration on weapons development and its own ambitions to foster a common European defense policy.

Germany’s decision to unilaterally halt all shipments of military equipment to Saudi Arabia in November after the killing of journalist Jamal Khashoggi has brought long-standing differences between Berlin and its European partners over arms controls to a tipping point.

  1. It is unacceptable that Germany could veto exports of weapons systems by other countries simply because they contained minor components that were built in Germany.
  2. Exports are needed to add sales volume and lower arms prices, otherwise European countries would have to boost military spending to as much as 4 percent of economic output to ensure adequate defences. Realistic export possibilities on the basis of clear and predictable rules are an essential prerequisite for the survival of the European defence industry.
  3. Germany tends to treat arms exports as a domestic political issue, but its policies have serious consequences for any bilateral cooperation in the defence sector and the strengthening of European sovereignty.
  4. Foreign manufacturers are increasingly turning their backs on German components out of concern over Germany’s strict export policies.

 

⇒ This restriction is a European suicide.

 

On industry: towards the « German-free »

 

This policy will leave the German Defence industry without perspectives: in Europe, Germany is viewed as unreliable partner; outside Europe, as an unpredictable ally.

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.

But 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. And the total weapons export volume represents only 0,06% of the total German exports…

With cynicism, the Government has condemned this industry to a slow and painful death.

Experts in the sector are now using the term « German-free » to advertise their products at defense trade shows. The 1972 Franco-German Debre-Schmidt accord called for consultation over arms exports, preventing one side from banning the exports of the other. But divergent public attitudes strained the compromise over time, and a spate of new projects has prompted calls for a new look.

What is different this time-round, is the action companies are taking to rid themselves of their German suppliers.

 

While it would be nearly impossible to remove the German content – about a third – from the Eurofighter, Airbus has begun redesigning its C295 military transporter to replace German-built navigational lamps that account for 4 percent of the plane. It is also looking for alternatives to German parts that account for about 15 percent of the content on the A330-based MRTT tanker that it has sold to 12 countries including Saudi Arabia.

Similar moves are underway in France, where German curbs on arms exports to other countries have already caused one smaller company, PME Nicolas Industrie, to announce dozens of layoffs.

France is also developing on its own a successor to the MILAN anti-tank guided missile it built with Germany in the 1970s, and French truck maker Arquus has begun marketing a truck for export to the Middle East as “German-free”.

Any moves to replace German parts in weapons systems could take 2-3 years to implement, and even longer to undo, said one source involved in the issue. Once you’ve switched to German-free production, it will take years to go back : the long-term consequence of the current export policy could be that there will no longer be a defense industry in Germany.

 

⇒ This restriction is an industrial suicide.

In conclusion: the worst still to come in German export policy?

The worst is still to come, and this for at least two reasons.

First, despite its low records in recent elections, the SPD leadership knows that it is in a strong negotiating position. Because even if Merkel’s government were to collapse or Mrs. Merkel to leave, 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.

Then, after the release of the weapon export guidelines, there will be a growing pressure to transform these guidelines into a binding law. When he held the position of Minister for Economy, Mr. Gabriel made a first move towards this objective; now, this a pressing demand from the SPD, die Linke and Bündnis90/die Grünen.

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