Wednesday, May 10, 2017

German Arms Trader Dodges the Law

Former German Defense Minister Franz Josef Jung has been confirmed to Rheinmetall's executive board. 

Rheinmetall, one of Germany's biggest military firms,  is looking to strengthen its connection with the long-standing client - despite the increasing authoritarian bent of President Recep Tayyip Erdogan.

 Avoiding national guidelines against exporting arms to countries that commit human rights abuses, Rheinmetall has recently come up with a new plan to get its military technology to Turkey: by partnering with local companies to build factories there. Rheinmetall was helping to build a tank factory in Turkey by contributing 40 percent of a new joint venture named RBSS - along with the Turkish automaker BMC and the Malaysian company Holding Etika Strategi.  Back in May 2015, the company signed a memorandum of understanding with the Turkish firm MKEK to develop new weapons systems and ammunition. Rheinmetall is following a very skillful strategy. These aren't exports, but joint ventures, which means they want to develop new ammunition and new kinds of tanks with local partners, so that they don't need approval from the German government.

In March it emerged that Germany's government had blocked the sales of some small arms and ammunition to Turkey, citing concerns over conflicts with Kurdish groups and human rights abuses. And, in August, several media outlets reported that Turkey's government had used tanks to attack Kurdish militias in northern Syria.

Shareholders have every reason to celebrate: Rheinmetall has just reported a 61 percent rise in first quarter earnings - prompting a lucrative rise in the share price

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