The deals reportedly include a Saudi Arabian request for Boxer armored cars built by defense giant Krauss-Maffei Wegmann, which is already in line to sell Riyadh 600 Leopard 2A7+ tanks worth $12.6 billion.
German newspapers say Riyadh's looking for "several hundred" armored vehicles modified for desert combat.
But Merkel's new policy of relaxing Germany's longtime restrictions on foreign arms sales to so-called conflict zones, such as the Middle East, or to autocratic regimes with poor human rights records, has raised ethical questions and run into left-wing opposition.
So far, she appears to be pushing such sales through but the proposed Boxer sale could run into trouble because the vehicles are being sought by Saudi Arabia's National Guard, whose primary mission is protecting the ruling House of Saud.
"There is the possibility of German armored vehicles being used against the masses," the German newsmagazine Der Spiegel said.
The Saudi monarchy is battling to prevent the wave of pro-democracy uprisings in the Arab world that began in early 2011 from fueling anti-government unrest in the kingdom, the world's leading oil exporter.
German opposition parties branded the Leopard deal with Riyadh "morally indefensible."
Merkel, though, seems determined to bolster German arms exports. Like all Western powers with major defense industries, Germany is coming to grips with hefty defense spending cuts that make its arms manufacturers dependent on foreign sales.
Der Spiegel reported that government figures for 2011 show "business is booming with arms export permits ... topping $13.1 billion for the first time.
"The numbers suggest that the Merkel Doctrine is beginning to have its effect."
"It's a risky strategy, and it also signifies a substantial departure from the national consensus on German foreign policy ... The Arab Spring showed how unstable many of the supposedly stable regimes in the region really are," the magazine noted.
"Germany used to be extremely careful about where it exported its weapons," it observed. But in recent years, "Merkel has shown a preference for sending high-tech armaments abroad rather than German soldiers -- even if that means doing business with questionable regimes."
British Prime Minister David Cameron's Conservative-Liberal coalition has run into the same problem.
Major defense sales to long-standing, high-paying arms customers Saudi Arabia and the United Arab Emirates have been called into question by the British Parliament because of the Persian Gulf states' human rights record.
These complaints, along with investigations into alleged corruption in big-ticket arms deals, has angered Riyadh and Abu Dhabi, and threatened the sale of some 100 Eurofighter Typhoon strike jets worth $9.6 billion.
It may be that Berlin sees opportunities for lucrative arms sales amid this deep strain in London's relations with oil-rich states that have long been close to Britain.
Germany's reported to be negotiating with Egypt for the sale of two Type 209 diesel-electric submarines, built by Howaldtswerke-Deutsche Werft AG of Kiel.
That sale would give Egypt's navy a major boost but the German negotiations have angered Israel, which has bought three Dolphin class Type-209 subs and is acquiring another three.
The deal would be worth at least $1.5 billion if it goes through.
Given the political turmoil in Egypt, and the emergence of an Islamist government replacing the fallen pro-Western dictatorship of Hosni Mubarak, Merkel may run into domestic opposition on that deal.
Israel's relations with Egypt, its 1979 peace partner, have deteriorated since Mubarak was toppled in February 2011.
Merkel's coalition is also negotiating with Algeria, the military heavyweight of North Africa. Defense giant Rheinmetall wants to produce up to 1,200 Fuchs armored personnel carriers in Algeria over the next decades.
Berlin has underwritten a $2.8 billion deal with Algiers for two warships. German arm sales to Algeria in 2010 were a mere $372.8 million.
The gulf emirate of Qatar, a top natural gas exporter, is mulling the purchase of 200 Leopards, a deal worth $2.5 billion.
In Asia, Der Spiegel says Indonesia wants to buy 100 Leopards under a $287 million deal.
The Germans are also zeroing in on India, which has a defense procurement program of $120 billion that makes it one of the world's largest arms buyers.
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