Merz heads to Gulf as Germany looks to diversify trade ties

AFP | Berlin

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German Chancellor Friedrich Merz headed to Saudi Arabia yesterday to kick off a Gulf tour as the biggest EU economy seeks to diversify its key trade and energy partnerships.

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.