When German Defence Minister Ursula von der Leyen (CDU) stepped into office last December, she must have braced herself for battle. Cuts to Bundeswehr procurement, efforts to adjust the military to more operations such as in Afghanistan, and the failed Euro-Hawk project, are just some highlights in her new challenging portfolio.
As von der Leyen settles into her new role, she does so knowing that German Chancellor Angela Merkel's successive governments put the arms trade at the heart of its diplomatic missions, despite the country's restrictive and phonetically chilling Kriegswaffenkontrollgesetz, (War Weapons Control Act) – a product of the country's historical sensibilities. Concerned more with its economic dimension and its effect on German foreign policy, the logic behind Merkel's realpolitik is that the performance of the German economy determines German international influence. What does this all mean for Israel defense companies?
Israel’s technological expertise and experience in warfare amid the dissolving Middle East is applicable to the continuous emergence of and adaptation of Germany to new realities worldwide, notably in Afghanistan and applicable terrorist risks on German soil.Indeed, traversing the recent business endeavours between the world's respective third and sixth arms exporters is the relation between German belt-tightening and Israel's permanent state of asymmetric warfare.
Unsurprisingly, the language and practices of German-Israeli security cooperation in managing this predicament take the form of surveillance, prevention, pre-emption and controlled vulnerability. The recent purchase of four frigate-class ships to protect Israel's natural gas reserves in the Mediterranean springs to mind. In terms of risk management, Israel is "being economic with war", to paraphrase Lord Armstrong, Margaret Thatcher's former Cabinet Secretary.
The paraphrase shifts the focus back to diversification. A case in point is the recently announced joint-venture between the defense technology giant Rheinmetall and Germany's industrial services provider Ferrostaal in the oil and gas field. The premise of this cooperation is to internationalize Rheinmetall, a decision taken to cement its long-term commercial viability in today's evolving defense ecosystem. "By moving Rheinmetall into new markets as a system integrator in the defense industry", argued Armin Papperger, Chairman of the Executive Board of Rheinmetall AG, "the firm will act as general contractor and subcontractor in the oil and gas industry".
Partnerships of this kind provide a myriad of arguments on why this trend would improve the performance of Germany's defense industrial base amid a highly fragmented European defense industry and shrinking defense budgets. According to Dr. Henrik Heidenkamp of the "Royal United Services Institute" (RUSI), Ferrostaal's expertise in building local production facilities would boost the prospects of "Rheinmetall International Engineering" in growing economies that further develop their domestic defense production and service capabilities.
The prospect of internationalizing is likely to be capitalised on by some Israeli defense companies. These civil-military synergies bring new opportunities for Israeli expertise, and the influx of German-Israeli technological innovations is set to become ever more instrumental in fuelling both countries' strategic push into emerging markets.
These patterns also leave plenty of room for synergy between German diversification and Israeli Prime Minister Benjamin Netanyahu's strategic realignment towards South East Asia, Russia and China. At a time when Israel's diplomacy is in flux, prominent German companies would gain a competitive edge from innovative and tested Israeli technology which is likely to globalize the latter.
If recent German-Israeli joint developments of niches are any indication, expect game-changing deals to be made within Germany’s defense industry in the medium-term that would affect Israel in reshuffling its political cards and help it to diversify its economic relations. One thing hard to deny is that German-Israeli cooperation serves the interests of a market navigating the problems of a global defense downturn.
With the centenary of the start of the First World War almost upon us, 2014 will see Jerusalem and Berlin's new coalition melancholically detached from past memories in the pursuit of subtle influence in international affairs. Recent reports about deepening, military ties between Germany and the Gulf Cooperation Council (GCC) states, albeit with Israeli approval, underscore this notion. At a time when the stakes in the Middle East have never been higher and expectations for peaceful resolutions have never been lower, Germany might be pressured to take its diplomatic game up a notch and carry the responsibilities of a powerhouse, just without the perks.
The writer is a Compliance Analyst at ELIEL Security Technologies Ltd