San Francisco Frontiers - Merz heads to Gulf as Germany looks to diversify trade ties

In a turbulent world where US President Donald Trump has rocked long-standing transatlantic security and economic ties, Germany is racing to cement alternative relationships worldwide.

Joined by a business delegation, the conservative leader will meet with Saudi Crown Prince Mohammed bin Salman, then travel to Qatar and the United Arab Emirates on his whistlestop tour until Friday.

"In the geopolitical environment in which we operate, we must intensify our partnerships with important and influential states in the world. The Gulf states are among them," a senior German official said ahead of Merz's trip.

A second official said Germany wanted to "strengthen trade and export opportunities, increase and incentivise foreign investment" and "diversify our supply chains... especially in the energy sector".

Germany has long exported defence goods and sealed major infrastructure deals in the Gulf region, whose wealthy monarchies have in turn used their energy riches to invest in German corporate giants from Volkswagen to Deutsche Bank.

When Russia's 2022 invasion of Ukraine led to sharply lower Russian energy supplies, Berlin turned to Doha to step up liquefied natural gas imports that got it through the following winter.

Berlin has now accelerated efforts to lessen its reliance on American LNG and wants to increasingly bank on green hydrogen generated through clean energy to achieve its climate targets.

Saudi Arabia and other Gulf states have meanwhile been moving to diversify away from oil and gas, investing heavily in sectors from renewables to tourism, logistics and AI.

- Regional tensions -

"In times of geopolitical tension and a global realignment, further intensifying relations with the Gulf States sends an important signal," said the Federation of German Industries.

The business group called on Berlin to "serve as a driving force" in ongoing negotiations on a free-trade deal between the EU and the UAE, and eventually with the Gulf Cooperation Council.

Merz visited India last month shortly before the EU and the South Asian giant sealed a trade deal cheered by Berlin, which is also pushing for quick implementation of an agreement with South America's Mercosur bloc.

Andreas Lenz, an economic and energy policy expert from Merz's CDU/CSU parliamentary group, said the Gulf held significant potential for German business.

"The region is very interested in German technology," including in the auto, chemical, mechanical engineering and medical tech sectors, Lenz told Phoenix TV.

On the issue of whether Merz would also address human rights concerns in the region, Lenz said that any overt displays of "moral arrogance" would be "rather counterproductive".

A government spokesman on Wednesday said only that "certainly topics where we have differing opinions will be addressed".

As an export-driven economy, Germany values stability in the Middle East, in part to safeguard key shipping lanes.

Merz is visiting Riyadh, Doha and Abu Dhabi at a time of high political tensions centred on Iran after it launched a bloody crackdown on demonstrators.

Merz has not held back with his disdain for the leadership in Tehran, last week condemning "a regime that can only hold onto power through sheer violence and terror against its own population".

Germany, with its dark history of World War II and the Holocaust, has for decades been a steadfast ally of Israel, but also criticised it for its conduct during the war in Gaza.

Merz will also be visiting the UAE as it hosts the latest round of talks to end the Ukraine war, involving Trump's envoy Steve Witkoff as well as Jared Kushner, the president's son-in-law.

N.Flores--SFF