Its customers include Israel, which has ordered three more Dolphin class submarines from Howaldtswerke-Deutsche Werft AG, and Algeria, which in June was cleared for frigates, armored vehicles and border security systems that newsmagazine Der Spiegel says are worth $14 billion.
German opposition parties and critics within Chancellor Angela Merkel's center-right coalition, as well as peace and church groups, are up in arms over the secretive Saudi deal because it underlines a fundamental shift in Germany's long-restrictive export regulations.
"In her eagerness to support the German defense industry, Merkel is breaking with a traditional doctrine of German foreign policy," Der Spiegel reports.
"The fundamental principle used to be that weapons produced in Germany couldn't be delivered to countries engaged in a conflict.
"Now, the government is justifying its deals with strategic arguments, saying the government in Riyadh is needed as a stabilizing force in the Middle East," Der Spiegel noted.
The previous German government sanctioned arms sales to Saudi Arabia as well but these totaled around $400 million, chickenfeed compared to Berlin's current military exports to the Middle East.
"This latest tank deal overshadows everything that went before," Der Spiegel observed. "And no other administration has so blatantly taken on the role of sales representative for the German defense industry."
The Germans are battling hard for military contracts in the Middle East, where conflict has been a constant since World War II and the post-colonial period. These have long been dominated by the United States, Britain, France and Russia.
Critics of Berlin's strategy to protect Germany's arms industry, which employs some 80,000 people, say that selling arms to Saudi Arabia, a key U.S. ally, is morally abhorrent given its refusal to embrace democracy and its opposition to the uprisings of the Arab Spring that have toppled four dictators since January.
"It isn't right for us, as a Christian democratic party, to arm a country with an unjust government that's working against freedom movements in Arab countries," declared lawmaker Erich Fritz of Merkel's Christian Democratic Union.
But the government maintains that while the kingdom is a problematic partner, Saudi Arabia plays a key role in mediating the Israeli-Palestinian conflict and is a crucial ally in the battle against Islamic terrorism.
But most importantly, it says, Saudi Arabia is in the front line against Iran's expansionist ambitions and its drive for nuclear arms.
The argument is that once Tehran goes nuclear it could attack its Arab neighbors, which provide much of the world's oil, and possibly even Israel.
This, supporters of arms sale argue, is why the Jewish state didn't oppose the sale of the 270 Leopard 2A7+ tanks built by Munich's Krauss-Maffei Wegmann and Rheinmetall to Saudi Arabia.
The German government's annual Defense Exports Report, released in early November, said German arms exports grew by 50 percent in 2010.
The report said Germany exported arms and military equipment worth $2.66 billion, including big-ticket items such as submarines, warships and tanks. In 2009, the total was $1.79 billion.
In addition, the report noted, German armaments manufacturers like KMW, almost half of whose sales involve Leopard tanks; naval shipbuilders ThyssenKrupp; firearms-maker Heckler and Koch; and Cassidian, an offshoot of the giant EADS European aerospace consortium, sealed contracts in 2010 with a total value of $6.66 billion.
The European Aeronautic Defense and Space Co., which includes Germany's DaimlerChryslerAerospace AG, manufactures the Eurofighter Typhoon. The Saudis bought 72 in 2006 for $6 billion.
"Growth doesn't come from Europe anymore," explained Cassidian Chief Executive Officer Stefan Zoller.
Defense budgets in Europe are stagnating, he says, and now the biggest opportunities are to be had in the Middle East, along with India and Brazil, both with expanding economies and military forces.
Cassidian recently secured a $2.6 billion contract to build a security system along Saudi Arabia's 5,600 miles of land border as well as air and seaports, comprising radars, sensors, cameras and other electronic systems.
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