Germany eyes more cautious arms export policy after 2013 surge

BERLIN (Reuters) - Germany said on Wednesday it would adopt a more cautious approach towards arms exports after a 24 percent surge last year helped by deals with Saudi Arabia, Qatar and Algeria that have fuelled a domestic debate on military sales.

Despite Germany's tendency to frown on matters military because of its Nazi past, it was the world's third largest arms exporter after the United States and Russia from 2008 to 2012. The report published on Wednesday showed that arms sales abroad jumped by about a quarter to 5.85 billion euros (4.72 billion pounds) last year.

Economy Minister Sigmar Gabriel, whose Social Democrats (SPD) share power with Chancellor Angela Merkel's conservatives, has signalled a more restrictive approach to approvals of arms deals than Merkel's previous centre-right coalition partners.

Gabriel suggested this would be a priority even if it meant job losses in the German defence industry, which accounts for up to 200,000 jobs.

"The Economy Ministry would not give approval to dubious business even if there were a justification to save jobs," wrote Gabriel in the report's foreword. He cancelled plans to present it in person because the prior coalition was in power for all but a few weeks of the period under review.

Gabriel's deputy, Stefan Kapferer, said that due to the Ukraine crisis, exports to that region were on hold.

"What applies to Russia also applies to Ukraine. There will be no approvals at the moment."

Kapferer told reporters that arms exports should be an instrument of security rather than economic policy and he signalled that approvals to export tanks and small arms such as assault rifles may become more difficult.

This could affect companies such as Rheinmetall and Krauss-Maffei Wegmann and Rheinmetall.

JOB LOSSES

Kapferer said companies like Airbus had already said what a more restrictive policy would mean.

Airbus, which builds fighter jets and military helicopters as well as civil aircraft, has warned such an approach could mean more job losses or moving factories abroad.

"The minister is talking to the relevant companies. It is clear what he is thinking and it will be up to individual companies to ask themselves if they should bother with certain products for certain countries," said Kapferer.

A special security council meets in secret to approve export licences and the government says decisions are taken on a case-by-case basis, taking into account human rights issues. Merkel and some cabinet ministers sit on the council, meaning the influx of SPD ministers could affect the number of approvals.

Opposition lawmakers argue that exporting to countries such as Saudi Arabia could lead to German weapons being used by Islamists or even against women and minorities.

"These weapons sales are blood-stained exports because people will be suppressed, displaced and killed with them," said Jan van Aken, foreign policy spokesman for the opposition Left.

Some 38 percent of total German arms exports went to EU and NATO countries or close allies such as Australia and 62 percent to other countries - up from 55 percent in the previous year.

The ministry said this was mainly due to a large volume of approvals for Algeria, Qatar, Saudi Arabia and Indonesia.

Germany sold most equipment - 826 million euros worth - to Algeria, followed by 673 million euros to Qatar, 611 million euros to the United States and 361 million euros to Saudi Arabia.

The government has already agreed to improve transparency by informing members of parliament within days of approving sales and to publish its arms export report more regularly.

(Additional reporting by Sabine Siebold; Editing by Noah Barkin, Stephen Brown and Ralph Boulton)

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