German Shipyard Halts Vessels Production For Saudi Arabia Because Of Weapons Sales Ban

Illustrative image: Luerssen offshore patrol vessel

Germany stopped issuing weapons export licenses for Saudi Arabia. The reason behind the decision is the lack of a satisfactory explanation about journalist Jamal Khashoggi’s murder at the Kingdom’s consulate in Istanbul.

German shipbuilding company Luerssen, a privately-owned firm commissioned five years ago to build coastal patrol vessels for Saudi Arabia, has halted its production due to the ban on arms exports.

On November 8^th, the company announced that construction at its Peene Shipyard had been brought to a halt nearly two years into the project and nearly all of the shipyard’s 300 workers had been put on short hours.

“Suspending construction and cutting working hours as a direct consequence is a heavy blow to us,” shipyard official Harald Jaekel said. The uncertainty whether the ban would continue or would be lifted made planning impossible, according to Jaekel.

This year alone, Berlin has approved 400 million euros of exports to the oil-rich country which makes Saudi Arabia the second-biggest purchaser of German arms after Algeria. All of those exports have now been halted.

On the same day it was reported that Saudi Arabia had made a $1 billion bid for a broad partnership with South African state-owned defense group Denel. The would also include acquisition of a minority stake in a joint venture with Germany’s Rheinmetall. According to anonymous sources, cited by Reuters the Kingdom was targeting Denel’s 49% stake in Rheinmetall Denel Munition (RDM).

Industry sources said RDM operates independently and is subject to South African law, which means exports from the unit are not subject to German government oversight, so even if Germany decides to impose a permanent ban on exports that would not affect the joint venture.

“Saudi Arabia has made a unique business proposition to the South African government. As our discussions are not finalised yet we cannot provide any comment,” Saudi Arabian Military Industries CEO Andreas Schwer was cited by Reuters.

Furthermore, Saudi Arabia’s deal with Spain for the production of warships also managed to get past the Khashoggi scandal. The $2.2 billion deal was signed during Saudi Crown Prince Muhammad bin Salman’s visit to Spain in April 2017. He met with Spanish Defense Minister Margarita Robles. The deal is a joint venture to produce five Avante 2200 corvettes complete with Combat Management System for the Saudi military.

In September 2018, Madrid halted a 2015 deal to sell 400 laser-guided precision missiles to Saudi Arabia related. The decision was made due to the Saudi-led coalition’s intervention in Yemen. Reportedly, the move angered Saudi officials who allegedly threatened to scrap the warship deal.

On November 2^nd, US Secretary of State Mike Pompeo said that sanctions on Saudi Arabia in connection the Khashoggi murder are “likely.” So far, the US has revoked 21 visas of Saudi citizens. According to Pompeo there would be more consequences. Their nature is yet to be disclosed.

On October 27^th, following Germany’s announcement of a ban on arms exports, German Chancellor Angela Merkel said that she and French President Emmanuel Macron had discussed implications of the Khashoggi murder.

“We agreed that when we have more clarity, and we are counting on that, when we know who was behind this then we will try to find a unified European solution or reaction from all member states of the European Union to show that we negotiate on the basis of common values,” Merkel said.

Thus, Germany is also, in a way, backtracking on its words and the vows of sanctions were essentially just putting on airs. The ban on arms exports may be lifted.

The UK has not undertaken any actions and it appears that the hysteria in UK media around the murder appears to be subsiding.

So far, in connection to Jamal Khashoggi’s murder Germany has blocked weapons exports, the US has blocked visas for 21 Saudi citizens. Officials with no executive power from various countries such as France and the UK have made strong remarks regarding the Kingdom’s conduct, however, nothing has come of it.

It is also clear that with the newly imposed sanctions on Iran that target its energy sector and oil exports it is even less likely for the US to impose any sanctions on Saudi Arabia. The truth of the matter is that the US is the Kingdom’s largest arms supplier. Furthermore, the US needs Saudi support for the sanctions on Iran to succeed. The US needs the Kingdom to increase its oil output to make up for the gap created by the sanctions on the Islamic Republic.