In mid-2011 reports surfaced that Saudi Arabia was preparing to buy around 200 German Leopard 2A7+ main battle tanks. Those reports stirred serious controversy in Germany, and indirectly confirmed the existence of a sales request.
Saudi Arabia would hardly be the first recipient of new or refurbished German tanks; indeed, Germany has displayed a consistent policy of selling cheap used tanks to countries all around Europe, and far beyond. Saudi Arabia is a somewhat surprising customer, because of its traditional “dual buy” structure for its land forces equipment, but there are strong reasons for Germany to be very interested in closing a Saudi sale. At the same time, the concerns expressed by opposition members are not without foundation.
The New Leopard, and the Saudi Opportunity
Krauss-Maffei Wegman introduced the Leopard 2A7 at Eurosatory 2010, as an evolution of the Leopard 2A6 PSO (Peace Support Operations) main battle tank. Like the American M1 TUSK, the Leopard 2A7 is optimized for urban operations, with optional explosive reactive armor, a (KMW FLW-200) remote-controlled weapon station and sensor array, and improved mine protection. Upgraded suspension, drive system, brakes and tracks are also part of the package, as are improved power generation system to handle its advanced electronics and 3rd generation thermal imagers.
Those changes are normal for current generation tank upgrades, but the Leopard 2A7 also has a couple of innovations that set it apart. Its longer 55-caliber Rheinmetall L55 120mm smoothbore tank gun produces greater velocity than the L44 gun found on American M1s and earlier-model Leopard 2s, and can be combined with programmable fuze shells to kill infantry behind and within buildings.
Its most significant additions, however, may be its combat engineering attachments. In Israel, large armored bulldozers have been the IDF’s most valuable weapons in major urban fights. American operations in Iraq’s urban centers have featured heavy use of combat engineering prior to major city battles, and Canadian Leopard 1A5 and Leopard 2A6M tanks in Afghanistan have benefited greatly from attachments like dozer blades and mine ploughs. The Leopard 2A7 has learned from all of these experiences, and comes to the urban fight with new levels of flexibility for a tank.
An initial upgrade of 50 German Leopard-2 tanks to the 2A7+ standard is set to begin production of the type. If the reported Saudi sale goes through, Saudi Arabia would become the type’s first export customer.
That sale would represent both a market breakthrough, and a significant financial opportunity for German firms.
The Saudi Opportunity
It would be a market breakthrough, because until now, the Saudis have equipped some divisions with American equipment (M1 and M60 tanks, Bradley and M113 APCs etc.), and other land divisions with French equipment (AMX-30 tanks, AMX-10P tracked APCs, etc.). The comparably modern replacement for its older French equipment would be about 300 Leclerc tanks and 500 or so Nexter VBCI or local Al-Fahd wheeled APCs. On the other hand, rumors of deals with countries like Russia have suggested that this opportunity may be open to new entrants, and the Saudis have been lukewarm at best toward the recent French-led war in Libya.
The military and export opportunity question is which Saudi tanks the Leopards would replace. They could be used to replace older American M60s, in which case the opportunity to modernize the kingdom’s “French” divisions still exists in full. Or, they could replace the AMX-30s, leading to questions about next steps in replacing those divisions’ accompanying AMX-10P infantry carriers.
The industrial question, in contrast, largely answers itself. Germany has a history of selling surplus German tanks at fire-sale prices, in order to broaden its firms’ customer base and reap upgrade & maintenance contracts. Chile, for instance, bought its Leopard 2A4s at just EUR 250,000 per tank base price. A Saudi contract doesn’t help Germany position its firms as Europe’s heavy armor designers, but it would involve new-build tanks at EUR 4-7 million each, and the associated after-sale maintenance contracts would be even larger and more lucrative. The Saudis traditionally devolve most equipment maintenance duties to foreign contractors, and pay accordingly. A combination of manufacturing and maintenance work for the Saudis could go a long way toward keeping Germany’s key armored vehicle producers busy, while solidifying their financial position.
If the Saudis choose to begin replacing their APCs, the deal starts to look even more significant. That would represent another big opportunity for KMW and Rheinmetall, would could offer upgraded Marder vehicles from German stocks, or make the Saudis the 1st export customer for their advanced Puma Infantry Fighting Vehicle. They could expect strong competition, even if the Saudis insist on keeping their dual-buy structure and avoiding American companies. BAE has made big inroads in Saudi Arabia, and can offer its battle-tested and popular CV90 IFV family. If General Dynamics’ Santa Barbara Sistemas becomes involved in the Leopard tank deal, it could give their ASCOD IFV a strong boost. Saudi Arabia’s long history of wheeled LAV purchases might give GD MOWAG’s wheeled Piranha V an opportunity, if Saudi requirements allow it, and that would also open the door to France’s Nexter, with their wheeled VBCI successor to the tracked AMX-10s.
Controversies and Politics
If the Saudis have been shopping the globe for a non-French supplier, Germany is a surprising alternative. To this point, the Saudis have pointedly chosen second suppliers with a reputation for non-interference after arms are sold, and a record of independence from their primary supplier. Germany’s strict export conditions, and traditionally closer relations with the USA, make them an odd choice in this regard. Germany is quick to attach conditions to its sales, and is seen as likely to withdraw sales or support from areas deemed to be conflict zones.
Some of those tensions have already been on display in the German Parliament. The opposition Left Party is pushing its opposition to the deal by citing the use of Saudi tanks and troops to quell recent uprisings in Bahrain, at the invitation of Bahrain’s government.
Then, too, Saudi Arabia projects an image of stability, but veteran watchers of the kingdom know that there is no small amount of tribal, religious, and even political ferment just below the surface. It is not possible to sell main battle tanks to a regime with serious domestic issues, and assume that they will never be used against internal unrest. The Left Party’s questions about what it would mean if German tanks were used in future to crush Saudi domestic unrest are fair, especially given the Leopard 2A7+ tank’s designed suitability for urban warfare scenarios.
On the other hand, German financing for Europe’s debt crisis bailouts has been taking a political toll on Merkel’s government, and economic wins have local political value. Germany already provides defense equipment to the Saudis, and is a major contributor to construction of the RSAF’s new Eurofighter multi-role jets.
There are also regional balance issues at work in the Middle East, which the German government is citing as justification for the sale.
Iraq will not be prepared to defend its borders when the US military removes its heavy ground forces, which means that its safety is likely to be guaranteed by some combination of perceived American resolve, and the willingness of the Gulf Cooperation Council to come to its aid. With the former in question, the latter becomes more important. Persistent reports have even said that Israel has supported the German sale, just as it quietly indicated its lack of opposition to the multi-billion dollar array of American military offerings announced in October 2010. In all of these cases, the Iranian regime across the Gulf is the real focus of local and Western concerns.
The long term issue for Saudi Arabia has to be support for its German weapons, if local conflicts escalate to domestic or international battles. The current CDU/CSU/FDP government has voted down opposition party attempts to block the Saudi sale, but its continuation in power beyond 2013 is uncertain, and the major opposition parties appear consistently hostile to the sale.
If German politics creates future problems, the Saudis could face real difficulties with a key segment of their tank fleet. Turkey’s sizable fleet of Leopard 2 tanks could offer an opportunity to have Turkish firms handle maintenance, but if Germany was opposed, the result from the Turks’ point of view would be a crisis in bilateral relations with one of Turkey’s biggest military suppliers. That would not be undertaken lightly.
The Saudis’ best approach would be to keep substantial spares inventories on hand, and insist on a larger share of local maintenance and assembly work using Saudi citizens. There is some indication that this kind of “localization” is becoming a concerted focus in Saudi Arabia. It remains to be seen whether similar arrangements might be true for any buy of Leopard 2 tanks. If, indeed, that buy materializes.
Contracts & Key Events
April 13/14: Blocked? In the aftermath of an election that narrowly forced Merkel into a “grand coalition” with the left-wing Social Democrats, the Saudi tank deal is reportedly dead. SPD Economy Minister and Vice-Chancellor Sigmar Gabriel has reportedly refused to agree, effectively blocking any sale by Spain’s licensed producer GD Santa Barbara Sistemas.
That will probably make several other countries happy: France, Turkey, the USA, and possibly even South Korea. CDU/CSU Party members have taken that point a step further, arguing in public that the Economy Minister is burying German jobs, and saying that if Germany cannot export outside of NATO, there will soon be no German arms industry. It’s certainly true that external sales make it easier to build an industrial base that can equip German forces.
This is a deep and ongoing disagreement between the parties. The relevant question is whether this issue is seen as being worth the damage to the coalition that would be involved, in order to sideline Gabriel’s objections. Sources: Der Spiegel, “Germany’s arms exports turn into gamesmanship” | AFP, via Turkey’s Hurriyet, “German government to cancel Saudi tank deal: report” | The Local – Germany, “Coalition argues over Saudi Arabia tank deal” | Frankfurther Algemeine, “Keine Leopard-Panzer für Saudi-Arabien” | Der Spiegel, “Leopard 2″: Regierung straubt sich gegen Panzer-Lieferung an Saudi-Arabien” | Westfalischer Anzeiger, “Gabriel blockiert Panzer-Export an Saudis”.
Aug 7/13: Germany’s Economics Ministry offers some information about recent weapon sales to the Gulf region, in response to a parliamentary question from Jan van Aken [Left Party]. In 2012, the Federal Security Council approved EUR 1.4 billion in shipments to Bahrain, Kuwait, Oman, Saudi Arabia, Qatar and the UAE.
In the first 6 months of 2013, the figure was EUR 817 million, with Qatar receiving EUR 635 million worth. That isn’t surprising, given the country’s recent EUR 1.9 billion purchase of Leopard 2A7 tanks and PzH-2000 self-propelled howitzers. But it’s also indirect confirmation that Germany hasn’t closed any significant Saudi sales, which would take a prominent share. Source: Deutsche Welle, “Germany boosts arms exports to Qatar”.
July 12/13: On to Plan B? Handelsblatt reports that the Saudis are reconsidering their planned German tank buy, in light of slow German approval, and a range of opposition that includes elements within KMW itself, as well as opposition politicians. When these hindrances are added to the fact that German firms would have to build the support infrastructure they would need in Saudi Arabia from the ground up, the entire buy is reportedly looking less attractive.
Handelsblatt says that American M1 tanks are the Saudis’ preferred alternative, which would make sense if the Saudis limit their goals to a swap-out of their old M60 tanks. The M1A2S is already serving in the Royal Saudi Land Forces, and an industrial slowdown in GDLS’ Lima, OH plant makes this a good time to negotiate.
If the RSLF’s French divisions need an upgrade, then buying more M1A2S tanks would leave them entirely dependent on the USA for their heavy armor, and the kingdom has worked hard to avoid that kind of situation in the past. If they exclude German and Israeli options, and confine themselves to in-production tanks, Saudi choices would include GDLS’ M1A2S, Russia’s T-90… or the Korean/Turkish Altay. China’s Type 99 might be classed as industrially active, but it’s not in production, and suffers many of the same flaws as the T-72 family. Handelsblatt [in German].
July 30/12: Qatar. Der Spiegel reports that fellow GCC member Qatar is interested in about 200 Leopard 2A7s. A sale to either country makes the other sale more likely. Read “Qatar Looking at Leopard 2A7 Tanks from Germany.”
June 17/12: The Saudis may want 600-800 new Leopard 2 tanks, instead of 200-300. If that went through, it would effectively replace both the kingdom’s 300+ French AMX-30s and its 450 or so American M60 tanks with the Leopard 2s. Germany’s foreign and defense ministries are reportedly against it. On the other hand, it would reportedly be a EUR 10 billion deal, with long-term and lucrative support work in addition to the initial production contracts. With Germany’s economy beginning to contract, and economic chaos looming in Europe, a sum like that tends to concentrate minds. Hence the finance ministry’s reported support.
Reports surrounding the previously-discussed deal remain murky, but the seems to be general agreement that the order hasn’t become a contract yet. Some reports say that a deal for 200 – 300 Leopard 2 tanks could be close, with Spain’s General Dynamics subsidiary Santa Barbara expected to produce the tanks under a license. That would partly sidestep German politics, and would also leave General Dynamics as a one-stop provider of tank support to Saudi Arabia’s tank fleets: M1, M60 (if any remain), and Leopard 2. Bild [in German] | International Business Times | UPI || Iran’s IRNA | Israel’s Arutz Sheva.
July 4-7/11: Opposition to the Saudi tank deal surfaces in the SPD, Left Party, and Greens, as well as some members of the governing coalition. Bundestag foreign affairs committee chair Ruprecht Polenz, and Bundestag President/ Speaker Norbert Lammert, are among the governing members opposed. Green Party MP Hans-Christian Strobele even went so far as to allege bribery, though he did so without a shred of evidence.
The Israelis, on the other hand, seem quite relaxed about it. Israeli Deputy Foreign Minister Daniel Ayalon is quoted as telling Die Welt that:
“First let me stress that I am unaware of an upcoming tank deal between Germany and Saudi Arabia… It is in the nature of such matters that one does not speak about them publicly. But I can assure you that we fully and completely trust Germany’s government.”
The Jerusalem Post adds that relations aren’t completely smooth, even as it cites Germany’s existing arms sales to Saudi Arabia:
“According to the Bonn International Center for Conversion (of military facilities and equipment to civilian uses), Germany has over the last 10 years sold 39 million euros worth of weapons to the Saudis. The moral uproar… might also strike Israeli observers as odd because of Germany’s role over the years in the sale of dual-use military and civilian goods to the Islamic Republic of Iran. The Bundestag remained largely silent about German-Iranian dual-use deals… [Germany’s] robust trade relations with Tehran (totaling more than 4 billion euros in 2010), including the ongoing sale of sophisticated engineering equipment to Iran, remains a thorny issue for Israel-German relations.”
If Eurofighter workshare is counted, total German arms sales to the Saudis rise very quickly. Der Spiegel | Deutsche Welle | Germany’s The Local | Die Welt re: Israel [in German] | Defense Update | Iran’s official IRNA | Jerusalem Post | Lebanese Daily Star | NOW Lebanon | Reuters.
July 2/11: Der Spiegel reveals the proposed sale:
“According to information obtained by SPIEGEL, the German security council, in which Chancellor Angela Merkel, Defense Minister Thomas de Maizière, and Foreign Minister Guido Westerwelle are represented, last week approved the deal in principle. The Saudis are interested in purchasing more than 200 units of the most modern Leopard version, the Type 2A7+.
German defense companies including Krauss-Maffei Wegmann, Rheinmetall and many supply firms, are hoping for a deal worth billions of dollars because the Saudis are aiming to buy brand-new tanks rather than used ones.
Riyadh had initially negotiated with Spain where the company Santa Bárbara [Sistemas, a General Dynamics division]… makes Leopard tanks under license. But now it appears that a large number of the tanks to be purchased will be made in Germany.”
Germany has traditionally refused to sell its battle tanks to Saudi Arabia and other Arab states, in part as a component of its historical obligation towards Israel, and in part as a spinoff of its policy prohibiting the sale of weapons to crisis/conflict regions. An anonymous “security source” even tells Reuters that the Saudis have already bought 44 tanks from Germany. Der Spiegel [German / English] | Photo gallery | Deutsche Welle | Arabian Business.
* KMW – Leopard 2A7+
* The Armor Site – Leopard 2
* Army Recognition – Leopard 2A7+
* Rheinmetall Defense – Large Calibre Weapons & Ammunition. Incl. L44 and L55 guns.
* Der Spiegel – Deal coverage mini-site [in German]
* Der Spiegel (Oct 14/11) – The Merkel Doctrine: Tank Exports to Saudi Arabian Signal German Policy Shift
* The Guardian (July 9/11) – Germany’s contribution to the Arab spring: arms sales