German shipbuilder Luerssen has put on hold the production of coastguard vessels ordered by Saudi Arabia due to the uncertainty surrounding the future of Berlin’s arms deals with Riyadh.
German Chancellor Angela Merkel announced last month that Berlin would no longer issue weapons exports licenses until Riyadh comes up with satisfactory explanation about dissident Saudi journalist Jamal Khasoggi’s murder at the kingdom’s consulate in the Turkish city of Istanbul.
The decision affected Luerssen, a privately-owned firm commissioned five years ago to build coastal patrol vessels for Saudi Arabia.
The company announced Thursday 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 in a statement.
The uncertainty made production planning impossible, the company said.
Saudi Arabia has been one of the major buyers of German weapons and military services.
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.
Saudi makes $1bn bid for S Africa military partnership
It was also reported Thursday that Saudi Arabia had made a $1 billion bid for a broad partnership with South African state-owned defense group Denel.
The deal would include acquisition of a minority stake in a joint venture with Germany’s Rheinmetall. Unnamed sources told Reuters that Saudi Arabia was targeting Denel’s 49-percent stake in Rheinmetall Denel Munition (RDM).
Formed in 2008, RDM specializes in the development, design and manufacture of medium and large-caliber ammunition including artillery shells.
The offer also allows Saudi Arabia to invest in Denel Dynamics, which develops tactical missiles and precision guided weapons.
The bid is part of Saudi Arabia’s plans to develop its own domestic defense industry with the goal of localizing half of its military spending by 2030. The country is currently the world’s third largest military spender.
Earlier this week, Saudi Arabia and Spain signed an agreement to launch a joint venture to produce five Avante 2200 corvettes complete with Combat Management System for the Saudi military.
The $2.2 billion deal was signed during Saudi Crown Prince Muhammad Bin Salman’s visit to Spain in April last year, where he met with the Spanish Defense Minister Margarita Robles.
Spain has continued military ties with the Riyadh regime in the wake of Khashoggi’s murder.
Back in September, however, Madrid said it was halting a 2015 deal to sell 400 laser-guided precision bombs to Saudi Arabia due to Riyadh’s role in the Yemen war, which has killed tens of thousands of Yemenis since its beginning in 2015.
The move enraged Saudi officials, who reportedly threatened to scrap the corvette deal with the Spanish state-owned military shipbuilder Navantia, endangering as many as 6,000 jobs in a country with one of Europe’s highest unemployment rates.
Spain backed off as a result, saying that it will proceed to deliver the bombs.
When pressed to reveal what caused the U-turn, Spanish Foreign Minister Josep Borrell said: “Saudi Arabia looks at its arms deals as part of its overall relations.”