Commentary, Economy

Germany’s return to the Middle East via economy

4 min read

Iran is currently encouraging international investments, but given the historical dominance of the French in some of the manufacturing and energy industries, the Germans might not enjoy the comfort that they had in Egypt. Germany’s shrewd economic diplomacy maneuvers in the Middle East deserve careful observation in the coming years.

In the uni-multipolar world of our time, the attitude of the United States under President Barack Obama’s administration to focus on its most vital geostrategic interests and leave considerable maneuvering room for major and regional powers in other issues allows the formation of pragmatic policy configurations. Germany’s shrewd initiatives of economic diplomacy in the Middle East in recent months provide a perfect example in this sense. As the European public has focused on the crisis in Greece and the future of the eurozone, both German Chancellor Angela Merkel’s government and the captains of the German capital had their eyes firmly fixated on two lucrative Middle Eastern markets with great potential of expansion -Egypt and Iran.

Post-coup Egypt under President Abdel-Fattah el-Sissi has been searching for both domestic legitimacy and international acceptance through major public investments in the fields of energy and transportation such as the project to extend the Suez Canal. Iran, on the other hand, carries huge untapped economic potential thanks to its massive frozen funds and investment space in energy production following the framework agreement with the P5+1 concerning the easing of economic sanctions in return for limitations on its nuclear program. In both cases, German economic diplomacy showed great flexibility and resilience to overcome competition from its Western allies and shrewdly pursued investment opportunities despite intense political criticism of human rights abuses.

For instance, Merkel calmly welcomed Sissi in Berlin despite widespread protests by human rights activists and accusations of “selling international legitimacy to a dictator” through a multi-billion euro energy deal. The prize for Germany’s pragmatic blindness to grave human rights violations in Egypt including death sentences against ousted President Mohammed Morsi and his colleagues was to become the leading Western partner in the grandiose spending spree started by Sissi to acquire legitimacy through development. German engineering titan Siemens received the largest order in its corporate history worth 8 billion euros ($8.75 billion) to construct three natural gas power plants that would be the largest in the world, 12 wind farms and a rotor blade production facility.

This long-term investment decision was also perceived as a sign of Germany’s willingness to be a major economic as well as political actor, impacting Egypt’s future and maintaining a strategic relationship. Merkel was understandably soft in her critiques of the use of the death penalty for members of the Muslim Brotherhood, but she was more robust in her praise for “closer economic ties with its partner Egypt in the fight against Islamic extremism” in the midst of the Islamic State of Iraq and al-Sham (ISIS) in Iraq and Syria, instability in Libya and Boko Haram in Nigeria. While teaching lessons to countries in and around Europe on the observation of fundamental human rights and liberties, Germany’s outright support for an autocratic regime that has left hundreds of dissidents dead, thousands jailed and dozens sentenced to death in mass trials illuminates pure German pragmatism.

Iran represents the second strategic Middle Eastern economy in which German banks and energy companies are involved in fierce competition with their global counterparts for future market shares. It is no secret that the relative easing of economic sanctions will unleash massive financial potential and investment opportunities in physical infrastructure and energy sectors. In retrospect, Germany’s involvement in the nuclear negotiations as the only country that is not a member of the United Nations Security Council was largely explained with reference to its enthusiasm to be effective in geostrategic repositioning and becoming among Iran’s major economic partners once the sanctions are lifted. On a recent trip by German Vice Chancellor Sigmar Gabriel to Tehran the groundwork for German banks opening branches in the Islamic Republic of Iran was prepared as soon as sanctions were lifted. Germany’s enthusiasm to restore banking relations with Iran at the first available opportunity was illuminating again, despite much criticism of the grave human rights violations there. Iran is currently encouraging international investments, but given the historical dominance of the French in some of the manufacturing and energy industries, the Germans might not enjoy the comfort that they had in Egypt. Germany’s shrewd economic diplomacy maneuvers in the Middle East deserve careful observation in the coming years.

Resource: Daily Sabah, August 7, 2015

Related Articles

mm

Sadık Ünay worked as an academic at the Universities of Manchester, Birmingham, Huddersfield in the UK; and at Maltepe, Yıldız Teknik and İstanbul Şehir universities in Turkey. He is the author of Kalkınmacı Modernlik: Küresel Ekonomi Politik ve Türkiye (Developmentalist Modernity: Global Political Economy and Turkey) (2013) and Neoliberal Globalization and Institutional Reform: Political Economy of Development Planning in Turkey (2006). He currently teaches at Istanbul University.