Profitable upheaval

The political upheaval in Tunisia and Egypt has already lastingly changed the face of northern Africa. And there are going to be many political changes in the region, according to Mohammed Halaiqah, head of the Jordanian parliament's International Affairs Committee.

The state of affairs in Tunisia, Egypt or Yemen was not stable, Halaiqah said at a recent German-Arab Business Forum in Berlin. But nevertheless, economic relations with Germany would grow further.

"I believe for some time business will be as usual," Halaiqah said. "We will still be a big importer of German goods. Germany has excelled in technology and quality. It is very active in the region."

According to Halaiqah, the recent upheaval in the region would mean more business for western companies.

"I'm sad to say this, but what has happened has brought destruction especially to the infrastructure and that definitely will open more opportunities for German companies and other companies from Europe," he said.

Staying in the loop

It's a difficult consideration for foreign firms. On the one side, the region boasts unstable political conditions. On the other side, there are quite enticing business opportunities.

Trade volumes between Germany and Arab countries increased by 16.2 percent last year to 38.7 billion euros ($54.7 billion), according to figures by the Federal Statistics Office. German exports into the region rose by 17 percent to 29 billion euros.

The Arab world is a growing market. This year, this growth is estimated at five percent. Anyone who wants a part of it cannot pull out now, said Saeb Nahas, head of the Syrian company Nahas Enterprises.

"It would be a big mistake if German companies did not continue their business in Syria because they will lose the market," Nahas said at the Forum. He noted that Syria, with a population of 22 million, was a major market. But its close ties to neighboring Iraq were also of significance.

"Syrians are doing beautiful business in Iraq and can be helpful to the German companies as well for their Iraqi business," Nahas said - alluding to the fact that many German companies missed the ideal moment to get involved in the reconstruction of Iraq. Today, other countries are doing business there, and anyone who wants to get on board needs good contacts.

Growth in the energy sector

But it isn't just the Germans who need the Arab market. The Arab countries themselves rely on the help of foreign companies to stabilize their economies. "Create jobs" - that was a constant appeal in countries like Egypt and Tunisia during their revolutions.

Thomas Bach, head of the Ghorfa Arab-German Chamber of Commerce and Industry, is campaigning for the German private sector to accompany the change in Arab countries. After all, the point is to build up a free-enterprise system and social market economy. Germany has expertise particularly in these areas which are currently in demand - and will continue to be, Bach said.

"Education and vocational training is one of these topics," Bach said. "But in these countries it will also be about building up infrastructure and ensuring sustainable development for these societies. This also pertains to investments in the energy sector. Germany is also particularly suitable in this case as a world market leader in renewable energy to play a special role."

But peaceful solutions in the respective countries must be found quickly, he added. The process of transformation will not be simple, but rather long and will differ in the various Arab nations. Twenty-two countries belong to the Arab League. Egypt is different than Saudi Arabia and Syria again unlike Tunisia. That is why a lot will depend on German companies viewing each country individually.

Personal ties count

The German architecture office Albert Speer and Partner (AS&P) in Frankfurt has designed buildings in Arab countries for decades, for example in Oman, Abu Dhabi, Kuwait and Saudi Arabia. The company will construct nine of the 12 soccer stadiums for the World Cup in Qatar in 2022.

Managing partner Gerhard Brand said AS&P was always open to other cultures and was one of the first German architects to dare to enter these countries and work there.

"I think we secured a very high reputation through our projects, which led to requests from other Arab countries," Brand said.

According to Brand, personal relationships and trust are the most important requirements for business relations in Arab countries. Though the development is generally somewhat tedious, the ties are then all the more friendly and lasting, he said.

"We've been working with institutions in Saudi Arabia in part for over 30 years," Brand said. "If a president calls and says we have a new project, I don't have to talk about contracts but rather start working because I trust his word. I know that we'll be able to work it out later contractually. It's completely different in Germany and Europe. We have a very high level of trust in advance in the Arab world."

In return, Arab partners expect resilient relations and stability from their German business partners - particularly in times of upheaval.

Weighing the options

For companies like architects AS&P, the risks nonetheless have to be carefully weighed, said Brand. But three basic principles apply to all countries. First of all, the company doesn't send any employees to a country where one of its partners wouldn't work.

"Secondly, in countries where we fear something could happen, we don't even try to make acquisitions," Brand said. "And the third point: when we're in a country, we maintain contact to our clients for as long as it's physically possible, but of course we don't endanger the lives of our staff."

When a situation gets too dangerous, the company pulls out its staff, though it continues working on the project.

"We continue to maintain contact, which today is possible electronically and when it stabilizes, then we are immediately there again," he said.

AS&P has pulled out of Libya, for example. In Egypt, though, the planners are continuing to work on a project in Alexandria which is currently on hold. The Egyptians assured the company that the project can move on in the next few weeks - possibly with new representatives, but with the existing contracts in effect.

Author: Sabine Kinkartz / sac
Editor: Rob Mudge