Saudi Arabia stops new business with Germany over its pro-Iran policy

Riyadh pulled the plug on awarding government contracts to German companies, in a possible response to Berlin’s pro-Iranian regime polices and its accusation that the kingdom’s foreign policy constitutes “political adventurism” in the Middle East.

Saudi Crown Prince Muhammad bin Salman is “deeply offended” by the German government and froze new business with the Federal Republic, wrote Der Spiegel.

The newsweekly’s source was Detlef Daues, a German business owner active in Saudi Arabia, who said he was told by confidants in Riyadh about the prince’s displeasure with Berlin.

“Good morning from #Germany where tensions rising w/ Saudi Arabia over German position on Iran. Saudi govt is said to halt orders from German companies,” Holger Zschaepitz, a business editor with the Die Welt daily, tweeted on Saturday.

A senior German businessman in Saudi Arabia, who asked to remain anonymous, told Reuters on Friday that the healthcare sector in particular was feeling added scrutiny when applying for Saudi tenders.

“They have even been asking: Where are the products coming from? Are they made in Germany? Do you have other manufacturing sites? And as soon as this is made in Germany, they have been rejecting any German applications for tender,” the businessman said.

Saudi Arabia is a significant trade partner for Germany, accounting for exports worth €6.6 billion ($7.7b.) in 2017, according to the Federal Republic’s statistics office.

In November 2017, Riyadh withdrew its ambassador from Berlin, to punish then-foreign minister Sigmar Gabriel’s claim that Lebanon “could not tolerate the adventurism that has spread there” in connection with Saudi policy toward the Land of the Cedars.

Gabriel largely aligned German foreign policy with the Islamic Republic of Iran and Qatar. The Saudi Foreign Ministry said its government also handed Germany’s representative in Riyadh a note of protest over “shameful” comments Gabriel made after a meeting with his Lebanese counterpart.

Siemens last year won an order worth around $400 million to deliver five gas turbines for a combined heat and power plant being built in Saudi Arabia.

Daimler soon thereafter secured an order for 600 Mercedes- Benz Citaro buses from Saudi bus operator SAPTCO.

Bayer, the Boehringer pharmaceutical company and Siemens declined to comment on the Der Spiegel report. Daimler said it could not confirm the report and that its business was ongoing.

A Saudi government media office did not immediately reply to a request for comment.

Bloomberg News reported in March that Saudi government agencies had been told not to renew some nonessential contracts with German firms.

At the time, it cited sources as saying that Deutsche Bank’s mandates in the kingdom were among those at risk, including a potential role in Saudi Aramco’s initial public offering, which could be the largest share sale ever.

Reuters contributed to this report.