Qatar May Block the Sale of a Volkswagen Plant to an Israeli Defense Company – Reuters

Plans by the German automotive group Volkswagen to transfer its loss-making plant in Osnabrück to the Israeli arms manufacturer Rafael are in jeopardy due to the position taken by the Qatar Sovereign Wealth Fund. The Arab monarchy, which is the main critic of the deal, is the third-largest investor in the European auto giant and holds 17% of the company’s voting shares. 

Representatives from Doha, who hold two seats on the automaker’s supervisory board, have expressed serious concern over these negotiations, citing the lack of official diplomatic relations and tensions between the countries. Qatar has historically linked the normalization of relations with Israel exclusively to the creation of a Palestinian state and also serves as a key mediator in negotiations with Hamas, whose political office is located in the Qatari capital. The intervention of a major shareholder risks blocking one of the key elements of Volkswagen’s crisis-response strategy, which aims to sell idle capacity to defense contractors amid falling demand in the European auto market.

Car production at the Osnabrück site, which employs about 2,300 people, is set to be fully phased out next year, and the Israeli state-owned company Rafael had planned to assemble components there for its “Iron Dome” missile defense system. To resolve the geopolitical impasse, the parties are considering a compromise involving the authorities of the German state of Lower Saxony, which is the group’s second-largest shareholder. A possible solution could be the creation of a joint venture between Volkswagen and Rafael, which would formally neutralize the direct involvement of Qatari capital in the Israeli defense project while preserving jobs at the German plant.

This was reported by Reuters.