Germany’s defense shift holds lessons for Middle East

Germany is undergoing an industrial reset. Its transition from cars to cannons is more a response to crisis than opportunity, but it is a welcome reorientation nonetheless.

The experiment carries lessons for a far more volatile region: the Middle East, where defense requirements are immediate and economic diversification is a strategic priority.

After 40 days of bombing of Iran and parts of Iraq by the US and Israel, the regional landscape is marked by tension and instability. Tehran and its proxies have repeatedly deployed missiles and drones to target infrastructure and civilian areas, from Gulf cities to Kurdish regions in Iraq. These attacks are part of a broader strategy to stretch defenses and impose economic and psychological costs.

The response of the Gulf states so far has proved that modern defensive systems work. Missile interceptors and antidrone technologies have saved lives, protected critical infrastructure and prevented wider escalation. They have averted mass-casualty events that, in another era, might have touched off a full-scale regional war. In doing so, they have also underscored that demand for advanced defensive systems will continue to rise.

Germany does not face an immediate security threat like so many Arab countries do, but its export-led model has been ailing under pressure from China, weak global demand and geopolitical shocks. Once-mighty car manufacturers have posted steep profit declines and job losses, prompting a rethink of the country’s economic direction.

This has forced Berlin to attempt a strategic pivot, turning industrial decline into economic opportunity at a time when Ukraine’s armament needs alone dwarf those of the rest of Europe combined.

As security concerns mount, Germany is shifting capital, talent and industrial capacity into defense production. According to a recent Wall Street Journal report, idle factories are being repurposed, skilled workers from declining sectors are being retrained and even automotive supply chains — long the backbone of German manufacturing — are being redirected toward military applications.

The scale of ambition is striking for a nation that embraced pacifism as a form of atonement after the Second World War. Nearly €1 trillion ($1.1 trillion) in defense funding is being unleashed across Europe, while German firms are expanding into areas such as drone engines, armored systems and missile components.

The challenge is to adapt the old economy. As the entire world knows, Germany’s advantage lies in its engineering depth — precision manufacturing, advanced materials and complex supply chains built over decades. These capabilities are also a natural fit for defense production, where reliability, scalability and speed are essential.

This is where the energy-rich Gulf has an opening. As part of their diversification strategies, countries such as Saudi Arabia and the UAE are investing in industrial capacity, technology and human capital. Policy and economic reforms are aimed at expanding local manufacturing, logistics and research ecosystems.

The demand surge for antimissile and antidrone systems, both regionally and globally, offers a strong incentive to study the German experiment carefully. These technologies represent a natural convergence of defense and innovation, involving software, sensors, artificial intelligence and advanced engineering. They are also defensive by nature, focused on protection rather than power projection.

Investing in such capabilities, once the region’s war clouds disappear, could deliver an array of benefits.

The demand surge for antimissile and antidrone systems offers a strong incentive to study the German experiment.

Arnab Neil Sengupta

The local production of defensive systems reduces reliance on foreign suppliers and shortens deployment times. In a region where threats can emerge quickly, this strengthens deterrence and ensures that vital infrastructure — from energy facilities to telecommunication networks — remains secure.

Second, defense manufacturing, by its very nature, is high value-added. It creates skilled jobs, supports small and medium enterprises and spurs innovation across sectors. In other words, this does not mean turning Gulf economies purely into war machines.

Third, there are technological spinoffs. Many defense technologies have civilian applications. Drone systems, sensors and AI-driven analytics can be used in logistics, agriculture, environmental monitoring and smart cities. The same ecosystem that builds interceptors can also power the digital economy.

Fourth, geopolitical stability. As the unprovoked attacks by Iran on the Gulf states since Feb. 28 have demonstrated, strong defensive capabilities reduce the incentives for escalation. When attacks fail to achieve their objectives, the conflict does not automatically end, but it becomes clear that the reputational damage greatly outweighs the perceived rewards.

Germany’s industrial reset is designed to ensure that Europe can defend itself, thereby preserving peace. The same logic applies in the Middle East: defensive strength can act as a deterrent, unlike missiles and drones, which can act as triggers for escalation.

Admittedly, the challenges are many. Defense industries require careful regulation, transparency and international coordination. There is always the risk of overdependence on one sector. But these risks are manageable for a region known for the efficient execution of large-scale infrastructure projects.

As the wars in Ukraine, Iran and Lebanon have demonstrated, in a world where combat drones and rockets can be assembled cheaply, exported across borders and deployed quickly, the balance of power has shifted.

Germany’s example shows how to move forward: a country long known for cars and a high-quality motorway system is now building the tools to defend a continent. In doing so, it is redeploying its core engineering strengths.

The Gulf has the financial resources, the strategic urgency and the policy frameworks to support a similar reorientation. What is required is a coordinated push to build a defense ecosystem focused on protection and deterrence.

For a region facing real and immediate threats, where missile and drone interceptors are already saving lives and preventing wider conflict, the message is clear. From Germany to Ukraine to the Gulf, modern defensive systems create opportunity — and, when wisely used, translate it into stability and growth.

• Arnab Neil Sengupta is a senior editor at Arab News. X: @arnabnsg