• Home
• /
• Opinion

A win-win partnership

Germany commands a large trade surplus with the UAE — its exports to the UAE were valued at 5.4 billion euros in 2006 — while the UAE only exported goods and services amounting to 469.3 million euro to Germany in return. Germany is the world champion in manufacturing exports, ranking even above Japan. Not surprisingly, it exports far more goods to the UAE than it imports. Thus, it is a model for the European Union at large, which is the only economic bloc worldwide that commands a trade surplus with the GCC countries and the UAE specifically. No wonder the issue of a more balanced trade relationship will play an important role in the upcoming talks between the two countries as the UAE's ambassador to Germany Mohammad Ahmad Al-Mahmoud pointed out.

With roughly six per cent of total imports of the UAE, Germany is the fourth-largest exporter to the emirates after China (11 per cent), India (nine per cent), and Japan (seven per cent). On the other hand, only one per cent of the UAE exports reach German shores. While Germany imports oil and gas from other countries like Russia, Norway, and Libya, the products of its manufacturing and automobile industry enjoy great popularity in the UAE. The appreciated euro may have made imports from Germany more expensive, but a Mercedes or a BMW still makes the heart of an Emirati car lover beat faster — if there was a comparable passion in Germany for exported goods from the UAE, trade relations would be more balanced. Germans love to travel, and are finding their way to the UAE in increasing numbers; of the nearly seven million tourists visiting the UAE each year, Germans account for a sizeable 300,000 or more. But this alone will not suffice. Until Germany relies more on energy imports from the Gulf region because of declining oil production in the North Sea, more balanced foreign trade can only come from the capital account - German foreign direct investment (FDI) in the UAE.

Germans might be the best engineers of the world, but their occasional risk adverse stiffness and lack of salesmanship command equal fame and notoriety. Thus, Germans have not jumped headlong into the UAE's frenzied investment market, while others, like the Asians or the British have been more active. The potential fields of cooperation are manifold. Germany is one of the major destinations for Arab health tourism. Many hospitals in Munich and Hamburg have special departments catering to the needs of their Arab patients, who are often accompanied by their families. They could open up branches in Dubai Healthcare City and offer these services in closer vicinity to their patients. Dubai International Capital is a large shareholder of Deutsche Bank and EADS, and Abu Dhabi's Masdar project would offer ample cooperation potential in the field of renewable energies, where German companies are world market leaders. The UAE might therefore attract FDI in this important industry one day. Meanwhile, German airport manager Fraport, which has shown interest in running Abu Dhabi airport in the past, has been on a UAE road show in January.

The signing of a strategic partnership agreement between the UAE and Germany in 2004 clearly aims at comprehensive cooperation, and one important challenge will be to complement trade with intensified institutional exchanges on the cultural and political levels. Many presidents of German universities have visited the UAE lately, but so far there is no comparable representation like France's Sorbonne or the New York University in Abu Dhabi. The well known Fraunhofer Institute for applied sciences has opened up a representative office in the UAE however and the Gulf Research Center has launched a master's degree in international relations with the Free University in Berlin — the same university that honoured Shaikh Mohammed on Thursday. Besides these, German's Goethe Institute for cultural exchanges opened a branch in Abu Dhabi in 2006.

All in all, the importance of relations, most notably trade relations, is likely to grow. Public awareness about the UAE's vibrant economy is widespread in Germany and the country's most prominent weekly magazine Der Spiegel just ran a large feature about Dubai this week. The visits of heads of state has increased considerably in the recent past, with former Chancellor Gerhard Schroeder coming to the UAE in 2003 followed by his successor Angela Merkel in 2007. It is noteworthy that Mr Schroeder in the meantime has assumed the honorary chair of the German Near and Middle East Association (NUMOV), thus expressing a vivid German interest in the region. No doubt, trade relations have ample room to grow and the visit of Shaikh Mohammed will encounter a lot of interest in Berlin.

The writer is Programme Manager Economics, Gulf Research Center