German overtures

Angela Merkel's whistle-stop tour of the Gulf region this week took in four states in as many days: United Arab Emirates, Saudi Arabia, Qatar and Bahrain.

It is the second time that Merkel has visited the region as chancellor. Her last trip took place in 2007 under the previous CDU-SPD government.

The fact that Chancellor Merkel is once again beating a path to the door of the Gulf states at this relatively early stage of her second term in office is intended to be seen as a clear signal of Germany's interest in partnership with the region.

Iran's nuclear program, the euro crisis, the role of women in Saudi Arabia, the Middle East peace process and cross-cultural understanding were just some of the diverse range of topics that came up during her brief trip.

Economic interests at heart

But the visit was intended above all to serve economic interests, according to Volker Perthes, Director of the German Institute for International and Security Affairs (SWP), and represents an acknowledgment of the increasing competition facing Europe in such markets.

"Ten or fifteen years ago German exporters wouldn't have expended too much effort on showing a positive countenance to the Gulf states. Now we are realizing here in Germany that the Gulf states have alternatives to Europe when they are looking for technological imports," Perthes told Deutsche Welle.

Only last December, a South Korean consortium surprisingly beat out a French and a US-Japanese company to land a 16-billion euro contract ($19.8) to build four nuclear power plants in the United Arab Emirates.

Economic powerhouse

And despite the spectacular bursting of the financial bubble in Dubai and the wider effects of the global financial crisis, the region has bounced back economically.

"This is a region with enormous potential for growth. It has recovered amazingly quickly from the crisis. Growth rates for this year are currently estimated at around five percent," said Felix Neugart, Director for North Africa and Middle East for the Association of German Chambers of Industry and Commerce (DIHK).

With Saudi Arabia, for example, rolling out huge publicly-funded projects in construction, healthcare and transportation, and the region, as a whole, seeking to improve environmental protection, the Gulf states offer exciting prospects. Germany is renowned for its strengths in these economic fields.

Nevertheless, Berlin has been late in recognizing this potential, according to Udo Steinbach, professor at the Center for Near and Middle Eastern Studies at the University of Marbach. It is something that he largely attributes to history. "We haven't got any history of involvement there. We were not a colonial power in the region," Steinbach told Deutsche Welle.

Time to catch up

The German chancellor is keen to ensure that Germany and the European Union do not miss the boat altogether. During her trip, Merkel hinted that the EU was close to a free trade agreement with the Gulf Cooperation Council (GCC), the political and social union of the six Arab Persian Gulf states.

High time, according to Steinbach. The stalled agreement has been under negotiation since 1991. The region's problematic human rights record and its imposition of export duties on raw materials remain stumbling blocks.

"They won't let us keep them waiting around for much longer. They are already going to China and elsewhere. But they also want to have other options. They are interested in a close relationship with the EU," Steinbach said.

During her Gulf trip, Merkel also reassured the region's worried investors that the European Union had got the euro crisis under control and that she would do her utmost to keep the currency stable.

Politics are pivotal

But Berlin realizes that the fostering of political ties, as well as economic ones, are vital for cementing good relations with the region. "Germany has to prove to its partners that its own interests go beyond purely economic ones," said Volker Perthes, of SWP.

In particular, the Gulf states expect Germany to play a positive role in the Middle East peace process and in dealing with the threat posed by Iran's nuclear ambitions.

"The states realize that Germany is part of the international deliberations regarding Iran as a member of the six-nation talks. They also see Germany has recently upgraded its relations with the Palestinian authority," said Perthes. In May, the Palestinian prime minister Salam Fayyad visited Berlin.

The Gulf region has also become much more strategically significant to the Germans and Europe on such regional issues in recent years, according to Christian Koch, the Director of International Studies at the Gulf Research Center in Dubai.

"The region is taking on a much more active part in international mediation, take for example King Abdullah's peace initiatives in the Middle East. There is recognition that the GCC can play a role in calming relations," Koch told Deutsche Welle.

Author: Julie Gregson

Editor: Susan Houlton