Qatar Blocks Rafael's Attempt to Acquire Volkswagen Factory in Germany

Qatar's sovereign wealth fund is blocking Israeli defense company Rafael's attempt to purchase the Volkswagen factory in Osnabrück, Germany, according to a report by Bild. The fund, which owns 10.4% of Volkswagen shares, opposes the deal amid what appears to be Qatar's effort to influence German foreign policy while expanding its security ties with Israel. In recent months, Rafael accelerated negotiations with Volkswagen management to acquire the Osnabrück plant and convert it from vehicle production to manufacturing components related to Rafael's weapons systems, including the Iron Dome and David's Sling air defense systems.

The backdrop to this deal is Volkswagen's crisis due to a sharp rise in demand for Chinese-made electric vehicles. Qatar, which funded Hamas with billions of dollars before the October 7 massacre, reportedly disapproved of Rafael's emerging acquisition. Rafael's interest in the Osnabrück plant is part of its strategy to establish a major manufacturing base in Germany, where it has purchased billions of dollars worth of Israeli defense systems over recent years. Germany's largest recent defense deal with Israeli industries involved the Arrow 3 missile system, totaling about $7 billion, marking the largest arms deal in Israeli defense history.

Rafael aimed to improve its production capacity in Germany to meet the global arms race demand, which surged after the Russia-Ukraine war began over four years ago. While Rafael's German plans face setbacks, Indian media report that Rafael intends to establish a missile interceptor production facility for the Iron Dome system in India, which would be the second country outside Israel to manufacture these missiles. So far, Iron Dome missiles and components have been produced in several U.S. factories under Israeli-American industrial cooperation.

In parallel, another major deal involving the German shipping giant Hapag-Lloyd and the Israeli shipping company ZIM is also at risk, partly due to Qatar's influence. Qatar's sovereign wealth fund holds 12.3% of Hapag-Lloyd, which planned to acquire ZIM for $4.2 billion. Saudi Arabia's sovereign fund also owns over 10% of Hapag-Lloyd. Several German government ministries and Israel's defense establishment have expressed opposition to the sale, fearing it could jeopardize Israeli interests during emergencies.