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The Arab region is at the crossroads of remarkable changes in all fields. Such changes have direct economic, political and social impact on Europe. Due to the fact that the Federal Republic of Germany is the main engine in Europe; not only for its highest EU population of 82 million, but also for having the world's third strongest national economy with €2302.7 billion of national income, it is closely scrutinizing the latest developments in the Arab World.

In the past decade, the Arab-German relations, mainly economic, have witnessed notable progress. Nevertheless, they are still extremely slim compared to available material opportunities of success for both parties; i.e. the great reputation of German products in Arab markets, on the one hand, and the dire demand in such markets for megaprojects, especially in the areas of modernizing infrastructure and industries, on the other hand. The limited trade exchange between the two parties is notable as German exports to Arab countries have not exceeded €21.5 billion in 2006 versus the total German exports, for the same period, of over €893 billion. In contrast, German imports from the Arab Word has no been any better; €12 billion out of a total of €734 billion.

Incomparable Trade Exchange

Germany has become a major partner of Arab countries. German exports to Arab countries are increasing over the years; from €18.5 billion in 2005 to€ 21.5 billion in 2006 (16%). These exports include high value-added products such as; machinery, equipments and means of transportation. On the other hand, German imports from Arab countries have increased during the said period from €10.5 billion to €12 billion (14.8%). The majority of such imports is raw materials of low-added value such as; oil, gas, clothes and agricultural products. This reflects the incomparability of trade exchange between the two parties; as the Arab trade deficit is radically increasing in favor of the German party. Such deficit is greatly related to prices of oil, which is the major export commodity in the Arab World, in addition to restrictions on the entry of Arab products to European markets; mainly high customs taxes.

Insufficiency and Complexity of Investment Exchange

Major obstacles faced by the Arab-German trade exchange include the meager direct and indirect German investments in the Arab World, which do not exceed 0.5% of the total German foreign investments. The main reason lies in concerns about investment in Arab markets that are mostly ranked by Germans as unsafe. As for the Arab countries, the oil producing ones in specific, they seek to invest in Germany, especially after the gigantic rise in oil revenues. However, Germans expressed their concerns that Arab investments have a political tint; in case of taking over strategic German companies in key sectors such as; communications, banking, planning and energy. Therefore, Germans attempt to protect such companies against foreign control for fear of political exploitation. The main reason for poor mutual investments is bureaucracy witnessed in Germany and Arab countries, where businessmen suffer from complicated procedures with regard to work and investment permits, in addition to difficulty of obtaining entry visas for Arab investors. Another main reason is the lack of an Arab Common Market capable of attracting German companies; as it is the case with the Chinese and Indian giant markets.

Obstacles Hindering Arab-German Relations

  • Over-abundance of laws and regulations, creating an inapplicable situation
  • Bureaucracy, red tape and administrative routine for both parties
  • Lag in economic reformation in the Arab world, which led to the lack of good investment environment
  • Lack of an Arab Common Market absorbing large German investments
  • Lack of trust and exaggerated German fears of investing in the Arab region
  • Diverse civilizations and languages and difficulty of understanding Arab customs and traditions
  • The majority of German companies' lack of awareness of the great opportunities of investment in the Arab region
  • The high prices of German products compared to alternative goods from China and some other European countries

Parties interested in the Arab-German relations aim at enhancing the opportunities for trade and investment exchange between the Arab world and Germany. This can only be achieved through bridging the gap of mutual trust and working on reaching conciliation of viewpoints, in addition to eliminating all obstacles. SABER GERMAN-ARAB CONSULTING & COOPERATION plays a major role in this area. We have over 20 years of experience in Arab-German relations and offer our services to varied customers: institutions, companies and individuals, interested in Arab-German cooperation.

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