Germany defends arms exports to Saudi, citing Iran

BERLIN (Reuters) - A German minister defended on Wednesday arms exports to Saudi Arabia because he said they strengthened the Gulf country's ability defence against Iran, as Berlin came under fire over a controversial tank deal.

Without confirming or denying media reports that Chancellor Angela Merkel's government approved the sale of 200 Leopard 2 tanks to Saudi Arabia, Deputy Economy Minister Hans-Joachim Otto told parliament Saudi Arabia was a key ally in fighting terror.

"It's known to everyone here that Saudi Arabia is a regional superpower with respect to Iran," Otto said. "There are factors at play here that have far-reaching consequences."

The government has faced sharp criticism after media reports Berlin had agreed a multi-billion euro contract to sell 200 tanks to Saudi Arabia. Saudi security sources have confirmed it.

Domestic critics said the sale contravened Germany's guidelines on arms exports, and opposition deputies accused the government of exporting advanced military technology to a country that actively suppressed human rights.

Selling armaments abroad is a sensitive issue in Germany due to its Nazi past, as well as the role arms makers such as Krupp played in feeding 19th and 20th century wars with exports of weapons to both sides of conflicts.

Germany has imposed strict rules on arms exporters, barring them from selling weapons to countries in crisis zones, with questionable human rights records or engaged in armed conflicts.

Saudi Arabia's Sunni Muslim rulers sent troops to back the neighbouring Sunni Gulf monarchy in Bahrain during a crackdown on protests led mostly by Bahrain's Shi'ite Muslim majority. Iran denounced the military intervention.

Israel and the United States were informed of the Saudi deal and voiced no concerns, Germany's Sueddeutsche Zeitung newspaper reported Wednesday, citing government sources.

"Anyone can work out that the Israeli government has agreed," sources told the paper. "Otherwise it would already have protested publicly."

Berlin sees Saudi Arabia as the "final and most important pillar" for Middle East stability after the wave of unrest that spread across the region following the popular uprising that forced a regime change on Egypt, the paper's sources said.

The 2A7+ Leopard tanks said to comprise the Saudi orders are made by Krauss-Maffei Wegmann and Rheinmetall and viewed as among the most effective battle tanks in the world.

In spite of self-imposed restrictions, Germany's arms exports have doubled in the last decade and the country is now the world's third-largest weapons exporter behind the United States and Russia.

(Editing by John Stonestreet; Editing by Jon Boyle)