Sunday , September 20 2020
Haenel versus Heckler & Koch: Bundeswehr order for Haenel from Thuringia

Haenel versus Heckler & Koch: Bundeswehr order for Haenel from Thuringia

Until this Tuesday you had to go to Suhl C.G. Don't necessarily know Haenel. The small company from Schützenstrasse 26 only has a handful of employees, but now C.G. Haenel landed an order that could have far-reaching consequences: for Suhl, for the country Thuringia and for German armaments policy. Haenel surprisingly received the tender won for the new assault rifle of the Bundeswehr.

It's a sensation. With its fully automatic MK 556 assault rifle, the company has outperformed the much larger armaments smithy Heckler & Koch, the permanent supplier of the German Armed Forces since 1959. It's like a cup victory for TSV Vestenbergsgreuth against Bayern Munich. The industry is baffled. Because C.G. Haenel himself seems much too small to manufacture so many assault rifles in series. In contrast, the group that stands behind the company is all the more powerful: the Arab state conglomerate Edge.

"A good decision"

There is astonishment in the Thuringian state interior ministry. Ironically from the left Prime Minister Bodo Ramelow ruled federal state, whose party would like to ban all arms exports, should an armory now be established to compete with Heckler & Koch? And one that is made by investors Abu Dhabi is controlled?

It looks like that.

"It is a good decision for the Bundeswehr and for Thuringia that was made here," said the CDU-Landtag MP and Major of the Reserve Christian Herrgott dem SPIEGEL – and pointed out that the company will now expand.

It has to be. And huge.

It's been a long time since C.G. Haenel was a big deal. Founded in 1840, the company produced the first assault rifle for the Reichswehr during World War II: the StG 44. Under the Soviet occupation, however, Haenel became a state-owned company. In 2008 the company was re-established under the old name – on a very small scale.

According to an annual report available to SPIEGEL, C.G. Haenel GmbH only had nine employees in 2018 and generated a turnover of just 7.15 million euros. The parent company, Merkel Jagd- und Sportwaffen GmbH, took over the loss of a good 485,000 euros. "Merkel is continuing the tradition of gunmaking in Suhl, which goes back to the 15th century," says the Merkel annual report. But the company only had 133 employees and had a turnover of 14.3 million euros.

The tender is about 120,000 assault rifles with an order value of around 250 million euros. That is more than 35 times the annual turnover of C.G. Haenel.

At Haenel, people keep silent

How is such a small company supposed to build tens of thousands of assault rifles? In Suhl people are silent: "This is an ongoing procedure, we are not commenting on it," says managing director Olaf Sauer.

It was unclear on Tuesday whether the defense department or the Federal Armed Forces procurement office checked the business background and the performance of Haenel. At a briefing from the Minister Annegret Kramp-Karrenbauer (CDU) for selected defense politicians, Defense State Secretary Benedikt Zimmer only explained that the weapons made by Haenel and Heckler & Koch both meet the requirements of the German armed forces.

In the end, according to Zimmer, Haenel's offer that, in addition to the procurement of weapons, also provides maintenance work and permanent service, was simply cheaper. As a result, the Thuringians were chosen. According to participants, Zimmer was not even asked about Haenel's links with Abu Dhabi. On Tuesday, the Defense Department asked for a day's patience for more precise answers.

One thing is clear: the small Thuringian armory can only shoulder such a large order with the help of its billionaire owner. C.G. Haenel and Merkel belong to Edge, the newly created state armaments company of the United Arab Emirates (UAE). Just last November, Abu Dhabi's government united around 25 companies from the fields of military, satellite and communications technology: into a conglomerate with, according to its own statements, 12,000 employees and around five billion dollars in annual sales. Mohamed bin Zayed Al Nahyan, the crown prince and de facto ruler of the UAE, took care of the opening.

Big plans in Abu Dhabi

Abu Dhabi's ruling family has big plans for Edge. There is a lot of money to be made with armaments, especially in the Gulf region. According to research by the Stockholm research institute Sipri, the UAE was the fifth largest arms importer in the world between 2009 and 2018 – although the country only has a good ten million inhabitants. The never-ending Iran dispute, the war in Yemen and all the other simmering conflicts make the region one of the largest arms markets in the world. Abu Dhabi's arms fair has long been one of the most important industry gatherings. And the UAE doesn't just want to buy and trade, they also want to sell.

"The UAE are very interested in acquiring military technology and producing it themselves," says Eckart Woertz, director of the Giga Institute for Middle East Studies. "For this they have bought foreign know-how over the years." As in Saudi Arabia the development of an armaments industry is intended to make the domestic economy more independent of the ups and downs in the oil markets – and at the same time strengthen the clout of one's own army.

Missiles, drones, artificial intelligence technologies – all of this is part of the Edge product range. The ruling family has installed a highly illustrious manager from the Arab world as the group leader: Faisal Al Bannai. The now 47-year-old became famous as the head of Axiom Telecom. The start-up, which Al Bannai founded in 1997 together with three friends and 50,000 pounds of start-up capital, is today one of the leading telecommunications trading houses in the region with sales in the billions.

In 2015, Al Bannai switched industries and started a cybersecurity company called Dark Matter in Abu Dhabi. Dark Matter soon caused a sensation in the security industry: when it was former employees of the CIA and lured the National Security Agency to the Gulf. Non-governmental organizations suspected Dark Matter of being involved in government surveillance and hacker attacks on opposition members. Al Bannai, himself the son of a former police general, denied illegal activities – but admitted in a 2018 interview that 80 percent of the orders for Dark Matter came from government institutions. According to experts, the company plays a central role in government surveillance in the UAE.

Al Bannai has been the boss at Edge for around a year. At the start he announced that he wanted to create a new kind of armaments company out of the conglomerate. Hybrid warfare, i.e. the combination of innovations from the arms industry and the civilian business world, is the future. Edge announced the first major order after just two weeks. A billion dollar missile for the UAE Army, of course. And in February the group presented the first military drone made in the UAE.

If nothing comes up, the Arabs will soon sell their assault rifles to the Bundeswehr. That has never happened before. It would be a triumph for Faisal Al Bannai – and the ruling house of Abu Dhabi.

But something can still come up. Heckler & Koch has announced that it will exhaust all legal steps – which in fact amounts to a complaint before the public procurement tribunal. In this case, the ministry already fears that the relevant contracts for the Bundeswehr's new orderly weapon can no longer be concluded during this legislative period. In Suhl and Abu Dhabi they have to be patient with the partying.

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