Prime Minister Benjamin Netanyahu revealed on Saturday night in a Channel 12 News broadcast that his decision to allow Germany to sell advanced submarines made by Thyssenkrupp to Egypt was based on a "defense secret," that he could not divulge even to the Ministry of Defense and IDF. He shared it only with the National Security Council head and after the fact with the Attorney General and his team, which investigated the submarines affair.
Whatever the secret may be, all the signs indicate that it involves the covert triangular relationship between Israel, Germany, and Egypt, especially at a time when Egypt was undergoing political and security upheaval.
Even before the Arab Spring, when Husni Mubarak was president, Cairo and Berlin signed an agreement for the supply of two Thyssenkrupp-made German submarines to the Egyptian fleet. Those submarines were a very basic model. The two countries maintained good relations between them, among other things because of the supreme importance of the Suez Canal for German industry. What was surprising was that Germany's friendly attitude continued even after Muslim Brotherhood leader Mohamed Morsi gained power following the huge wave of demonstrations that swept over Egypt in 2011.
According to the reports, Berlin contacted the Israeli government that year and obtained verbal approval from Netanyahu and then-Minister of Defense Ehud Barak to sell additional submarines to Egypt at a time when it was unclear who would lead the country. In June 2012, following the second round of the Egyptian presidential elections, it became clear that Morsi would be president. Nevertheless, construction of the first two submarines for Egypt already began in February 2012 and continued without interruption, even though Morsi was in power. The deal reportedly cost €900 million. In September 2012, it was officially reported in the German media that the new Egyptian government was interested in buying two more submarines, this time an advanced model, and that Berlin had agreed. "This does change our commitment to Israel's security," German government spokesperson Steffen Seibert, who is still serving, said at the time. He refused to confirm or deny that the deal had been approved.
How come Germany agreed to submarine deals reportedly totaling $1 billion with an Egypt governed by the Muslim Brotherhood and having close ties with Iran?
One hypothesis is that Germany sought to strengthen the power of the Egyptian army, which acts as a virtually autonomous agency in Egypt. In other words, the deal for advanced submarines was designed to inject money into the Egyptian army, with which Israel and Germany had direct ties, over the head of the Egyptian prime minister and president. This may sound like a preposterous movie script, but Israel is not the only place where people profit from billion-dollar arms deals. In Egypt, it may even be more systematic.
According to this hypothesis, the next dramatic Egyptian step was well planned: the army's counter revolution against President Morsi in July 2013, which drove him from office and brought about the imprisonment of him and the Muslim Brotherhood leaders in Egypt. What happened after General Abed el-Sisi seized power can retrospectively justify the aid to the Egyptian army. Under his regime, the security relations with Israel became so close that Israel used UAVs for attacks against terrorists in Sinai, Egypt blocked the tunnels to the Gaza Strip, Hamas was isolated, and Egypt clearly joined the anti-Iran axis in the Middle East.
El-Sisi also become an important partner for Germany - and a profitable one. Under his rule, Egypt became one of the world's leading importers of German arms. In addition to the two submarines already supplied, Egypt bought 330 air-to-air missiles, light arms, APCs, etc. German arms exports to Egypt totaled €708 million in 2017, and zoomed 205% in the past five years, compared with the preceding five years. In the past five years, Egypt became the world's third largest weapons importer, according to figures from the Stockholm International Peace Research Institute (SIPRI). Egypt also signed a huge €8 billion electric turbines construction deal with German company Siemens.
All of this was approved by Israel. "From what I know and from my impression from the Israeli defense delegations that visited Germany following the 2013 military coup in Egypt," Stephan Roll, an expert on Egypt at the German Institute for International and Security Affairs (SWP) told "Globes," you could say that they did not express opposition to the supply of German arms to Egypt. Perhaps the opposite was true." In other words, the big secret that Netanyahu refrained from revealing could have been related to the dynamic of the relations between German and the Egyptian army, with Israel's encouragement, at a time of upheaval in Egypt.
Thyssenkrupp: GrafTech is one of hundreds of suppliers
German corporation Thyssenkrupp responded for the first time to the recent accusations concerning a possible indirect profit gained by Netanyahu from the submarines deal through a holding in shares in the GrafTech company, controlled by US businessperson Nathan Milikowsky, Netanyahu's cousin.
In response to a question from "Globes," a company spokesperson stated, "GrafTech is one of hundreds of suppliers in the corporation's steel transactions. The volume of business with it is in the low range of business with other partners." The spokesperson added that after looking into the matter thoroughly, it was found that "GrafTech never had a direct business connection with the corporations TKMS marine division; its only business was with the steel division." Thyssenkrupp's marine division was responsible for building the submarines for the Israeli navy, and was also a partner with another German shipyard in building four missile boats for Israel.
This announcement does not deny any connection between the company whose shares Netanyahu held, and which Milikowsky continued to lead until August 2015, and Thyssenkrupp. It merely separates the decision to procure submarines and warships and GrafTech's future profits. Still, since GrafTech announced that Thyssenkrupp was an important customer, and since the marine division was part of the corporation as a whole, there is a connection between the companies. If the legal authorities in Israel investigate the matter, they will have to examine how important this connection is.
Published by Globes, Israel business news - en.globes.co.il - on March 25, 2019
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