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Defense Production and Export

Germany's capacity to produce its own arms and military equipment grew simultaneously with the development of the Bundeswehr. As a matter of policy, arms production is confined to the private sector. There are no government-operated defense plants, and most companies involved in arms manufacture are predominantly engaged in civilian industrial production. Private industry accounts for 85 percent of all military research and development, procurement, and maintenance. Nevertheless, defense production represents no more than 3.4 percent of the total value of output by the country's processing industries. Although some 225,000 persons work on defense contracts, this group constitutes less than 1 percent of the workforce.

The Armaments Division of the Ministry of Defense has responsibility for planning, controlling, and supervising the armaments sector. Under it the Federal Office for Military Technology and Procurement (Bundesamt für Wehrtechnik und Beschaffung--BWB) in Koblenz procures all defense matériel. The BWB is a civilian agency staffed by some 18,300 persons, about one-third of whom work at seven armaments research and testing centers, each responsible for a particular category of systems. Certain major joint projects, such the Tornado and the European Fighter Aircraft (EFA), are independent of the BWB's supervision.

The Bundeswehr estimates that about 70 percent of its major procurement items are produced as part of international projects. These have included the EFA and Tornado aircraft (both developed in cooperation with Britain, Italy, and Spain); the Alpha Jet, the Roland short-range air defense system, and the Tiger PAH-2 antitank helicopter (all joint projects with France); and the multiple-launch rocket and NATO identification systems, developed in cooperation with several NATO countries.

Only in the aerospace and munitions industries does defense account for 50 percent or more of sales. Among the largest firms is Deutsche Aerospace (DASA), founded in 1989 to incorporate the aerospace and other defense activities of the Daimler-Benz group. DASA has a controlling interest in Messerschmitt-Bölkow-Blohm (MBB), located at Ottobrunn near Munich, which produces combat aircraft, helicopters, and HOT, Milan, and Exocet missiles. It also controls Dornier, which produces various equipment and aircraft and which has been a major contractor in the EFA program. Motoren und Turbinen Union (MTU), another unit of DASA, is a large producer of parts for aircraft, ships, and tanks.

Rheinmetall Berlin, another major defense contractor, produces armored vehicles, artillery, and munitions. Rheinmetall is based in Berlin and Düsseldorf. In 1991 it assumed a controlling interest in Krupp Mak Maschinenbau, thereby adding tracked armored vehicles, such as the Marder, to its output. The Krupp industrial group's defense sector was thenceforth limited to naval weapons systems. AEG-Telefunken is a leading supplier of electronics and radar; Krauss-Maffei of Munich produces the Leopard tank.

According to ACDA, known German exports of arms were valued at an estimated US$1.1 billion in 1993 and constituted 0.3 percent of total German exports; arms imports had a value of US$250 million and amounted to 0.1 percent of total imports. During the 1991-93 period, nearly half of Germany's arms transfers were made to other NATO countries, notably Portugal, Greece, the United States, Turkey, and Norway. Switzerland, the Republic of Korea (South Korea), and Finland were also substantial clients, while smaller quantities were shipped to Singapore and Colombia. In the Middle East, arms valued at US$820 million were exported to five countries during this period, Saudi Arabia taking US$525 million and Israel US$200 million.

West Germany's grant-type military assistance to other NATO countries focused on Turkey, Greece, and Portugal. The major recipient was Turkey, a beneficiary of German military aid since 1964. Arms transfers included Leopard tanks, Milan antitank missiles, and retrofit kits for M-48 tanks. West Germany also assisted Turkey with infrastructure and defense manufacturing facilities.

Although West Germany imposed controls on weapons exports, repeated charges have been made that arms shipments by private West German suppliers were not carefully monitored. In the 1980s, evidence mounted that West German firms were instrumental in assisting Iraq and Libya in developing weapons of mass destruction. In 1988, based on information supplied by the United States implicating West German firms in the construction of a poison gas plant at Rabka, Libya, the owner of one company was sentenced to prison for illegal exports and tax evasion. In early 1993, the German government announced that German firms were being investigated for delivering equipment for a second chemical weapons factory in Libya. In a report issued in 1991 by the International Atomic Energy Agency, thirteen Western companies, more than half of them German, were identified as having contributed to the Iraqi nuclear program.

In 1992, after extensive international publicity over the inadequate enforcement of arms controls, the Bundestag approved legislation to create a new government monitoring agency. The new law authorized screening of mail and use of wiretaps to facilitate investigations of suspected violators. Harsher punishments could be imposed, including confiscation of profits from illicit arms sales and imprisonment of company officers.

Under German arms policy, export permits are denied for the sale of weapons to areas of tension. This policy has applied in particular to the Middle East, where Germany felt a moral obligation to avoid actions that could endanger Israel. In 1992, despite a ban imposed by the Bundestag, at least fifteen Leopard tanks were shipped to Turkey, where they were apparently used by the Turkish army to attack strongholds of the rebel Kurdish Workers' Party. The minister of defense, Gerhard Stoltenberg, claimed that the shipment had been approved without his knowledge. Nevertheless, Stoltenberg was forced to resign from the government in the ensuing uproar.

In early 1993, the Bundestag disapproved the delivery of submarines and frigates to the Taiwan government, although SAM systems produced in conjunction with the United States were approved for sale under the rationale that they were purely defensive weapons. Diesel engines for a large quantity of French tanks sold to the United Arab Emirates were also approved for export.

Domestic critics of Germany's arms export practices assert that German firms have easily circumvented controls through coproduction schemes or deliveries of key parts to other countries; through licensed production in other countries of arms that reach prohibited users; through the sale of technology and whole weapons plants, of which Germany is the world's foremost exporter; and through sales of items improperly labeled civilian goods. Critics claim that the UN embargo on arms sales to South Africa was violated by false labeling of troop transport vehicles, helicopters, and minesweepers.

Data as of August 1995

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