Gulf States Hold Closed-Door Talks in Berlin to Change ‘Image’ of Iran Relations

Abu Dhabi Crown Prince Sheikh Mohamed bin Zayed Al Nahyan meets with German Chancellor Angela Merkel earlier this month. (WAM)
Abu Dhabi Crown Prince Sheikh Mohamed bin Zayed Al Nahyan meets with German Chancellor Angela Merkel earlier this month. (WAM)
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Gulf States Hold Closed-Door Talks in Berlin to Change ‘Image’ of Iran Relations

Abu Dhabi Crown Prince Sheikh Mohamed bin Zayed Al Nahyan meets with German Chancellor Angela Merkel earlier this month. (WAM)
Abu Dhabi Crown Prince Sheikh Mohamed bin Zayed Al Nahyan meets with German Chancellor Angela Merkel earlier this month. (WAM)

Gulf countries apprehensively approach Germany given its seemingly close political ties with Iran and its somewhat “lenient” approach towards its regime. Efforts have been increasing in Berlin to change this image among Gulf countries. To that end, a forum, described as the first of its kind, was held in the German capital to discuss the ties with the Gulf. The meeting brought together decision-makers from the Gulf and Germany to hold frank, rather than diplomatic, talks.

The two-day meeting was organized by the Federal Academy for Security Policy and the German-Arab Friendship Association and held away from the media spotlight. Iran took center stage at the discussions given recent tensions in the Gulf. The situation in each of Yemen, Syria and Iraq were also covered. Gulf officials did not hesitate in blaming Iran for stoking tensions, while also accusing Germany of failing to play a bigger role in easing them. They also spoke of “economic interests” binding Berlin to Tehran that was limiting Germany’s political policy.

German officials at the talks, however were keen to underline that Berlin and Tehran did not enjoy a “special” relationship. German officials included figures from the defense and foreign ministries and lawmakers. They stressed that economic relations do not dictate Germany’s behavior.

Accusations of “special” relations between Germany and Iran are not unfounded and date back to several decades and continued even after the 1979 revolution. In 1984, then German Foreign Minister Hans-Dietrich Genscher visited Tehran, becoming the first European official to do so since the revolution. Since then, Germany became a main trade partner to Iran. In 2014, it was estimated that German exports to Iran exceeded more than 3.5 billion euros.

After the 2015 nuclear deal, this exchange increased even further. German Economy Minister Sigmar Gabriel was among the first European officials to visit Tehran after the deal was signed. In 2015, the trade exchange between the two countries reached 2.5 billion euros and these numbers increased in early 2016. They have, however, started to steadily decline after the US withdrew from the nuclear accord in May 2018.

Despite this, Germany remains one of the greatest defenders of the nuclear pact and it was among the European countries that reaped the most benefits from it, which explains why Berlin is working tirelessly to salvage it, prompting accusations that its relations with Tehran were dictated by its economic interests.

Officials at the forum refuted these claims, saying that their country was seeking to prevent Iran from developing nuclear weapons, which would lead to an arms race in the region. They said that the 2015 pact was the best solution to the situation, reiterating their opposition to Washington’s withdrawal from the deal.

MP Johann David Wadephul told Asharq Al-Awsat that disputes between Germany and the Gulf were not a big as they are being portrayed. He pointed out that two sides are in agreement that Iran should not acquire nuclear arms, but they had differences over how to implement this. They were also in agreement that Iran’s policies in the Middle East were aggressive and hostile, which is a danger to peace in the region. On whether Germany and Iran enjoy special relations, he said: “We do not share any strategic values or goals with Iran.”

Moreover, Wadephul said that after the US withdrawal from the nuclear deal, many opportunities were available to reach a common strategy on Iran. “We must seize the opportunity to draft a new pact because the old agreement is over.”

“This will give us a chance to reach a comprehensive deal that covers all of Iran’s policies, including its hostile behavior that allows it to make gains in Syria and other areas,” he remarked.

In addition, he said that economic ties were not dictating relations between Berlin and Tehran. “We do not have an important economic relationship with Iran. We have very important economic ties with the Gulf states, especially Saudi Arabia,” he stressed.

According to the German Foreign Ministry, Saudi Arabia and the United Arab Emirates are Berlin’s two greatest trade partners in the region. In 2017, German imports to the Kingdom exceeded 6.5 billion euros.

Relations between Riyadh and Berlin have returned to normal after previous tensions that saw the Kingdom withdraw its ambassador in 2017 over the then German foreign minister’s accusation that Saudi Arabia was behind the resignation of Lebanese Prime Minister Saad Hariri from his post. Relations went back on track after current Foreign Minister Heiko Maas offered a public apology during a joint press conference with then Saudi Foreign Minister Adel al-Jubeir on the sidelines of the United Nations General Assembly.

Saudi Arabia has since then appointed a new ambassador, Prince Faisal bin Farhan al-Saud, who was born in Germany.

The envoy took part in the opening of the Berlin forum. He told Asharq Al-Awsat that since assuming his post earlier this year, he sensed “great interest” from Germany in relations with Saudi Arabia and the important role it plays. He echoed Wadephul’s comments that Germany was not close to Iran.

“I think they realize that the greatest source of instability in the region is currently Iran,” he stated.

Indeed, the side discussions at the forum focused on Yemen and Tehran’s role there. The Gulf participants said that Tehran is the main backer of the Houthi militias and it was obstructing the UN-sponsored political dialogue. They urged Germany to exploit its relationship with Iran to pressure the Houthis to accept political dialogue based on international resolutions. They also called on it to “quit playing the role of silent mediator and play an active one.”

Despite German officials’ acknowledgment that Iran was involved in the conflict, they asserted that the Yemenis alone could end the war. They did admit, however, that Tehran has a hand in hindering progress, in contrast to Riyadh and Abu Dhabi’s positive role that facilitated the Stockholm agreement.

Head of the Federal Academy for Security Policy Karl-Heinz Kamp said that the forum served as a platform for Gulf-German talks, acknowledging the problems between the two sides. He hoped that the forum would be held on an annual basis.

“We realize that Iran poses a danger to us too,” he added, saying that Germany’s foreign policy was closest to the Gulf policy.



Borderless Europe Fights Brain Drain as Talent Heads North

Eszter Czovek, 45, packs up her house as she moves to Austria, in Budapest, Hungary, October 28, 2024. REUTERS/Bernadett Szabo
Eszter Czovek, 45, packs up her house as she moves to Austria, in Budapest, Hungary, October 28, 2024. REUTERS/Bernadett Szabo
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Borderless Europe Fights Brain Drain as Talent Heads North

Eszter Czovek, 45, packs up her house as she moves to Austria, in Budapest, Hungary, October 28, 2024. REUTERS/Bernadett Szabo
Eszter Czovek, 45, packs up her house as she moves to Austria, in Budapest, Hungary, October 28, 2024. REUTERS/Bernadett Szabo

Until recently aerospace engineer Pedro Monteiro figured he'd join many of his peers moving from Portugal to its richer European neighbors in the quest for a better-paid job once he completes his master's degree in Lisbon.
But tax breaks proposed by Portugal's government for young workers - up to a temporary 100% income tax exemption in some cases - plus help with housing are making him think twice.
"Previous governments left young people behind," said Monteiro, 23, who is studying engineering and industrial management at the Higher Technical Institute in the Portuguese capital. "The country needs us and we want to stay but we need to see signs from the government that they are implementing policies that will help."
Monteiro cites in particular the cost of buying or renting a home amid a housing crisis aggravated by the arrival of wealthy foreigners lured by easy residency rights and tax breaks, Reuters said.
He is doubtful the government's new measures will be enough.
"Some of my friends are now working abroad and earn substantially more money... and have better career development opportunities," he said. "I'm a little bit skeptical concerning my job opportunities here in Portugal."
Portugal is the latest country in Europe to seek to tackle a brain drain holding back its economy. Tax breaks for young workers in the budget currently going through parliament will take effect next year and could benefit as many as 400,000 young people at an annual cost of 525 million euros.
Talent flight to wealthier countries of the north is a problem Portugal shares with several others in southern and central Europe, as workers take advantage of freedom of movement rules within the trade bloc. Countries including Italy have tried other schemes to counter the flight, with mixed results.
By exacerbating regional labor shortages and depriving poorer countries of tax revenues, it is yet another hurdle for the EU as it tries to improve its ebbing economic growth while addressing population decline and lagging labor productivity.
Donald Trump's victory in US elections this month raises the stakes, with the risk of across-the-board trade tariffs on European exports of at least 10% - a move that economists say could turn Europe's anaemic growth into outright recession.
About 2.3 million people born in Portugal, or 23% of its population, currently live abroad, according to Portugal's Emigration Observatory. That includes 850,000 Portuguese nationals aged 15-39, or about 30% of young Portuguese and 12.6% of its working-age population.
More concerning still is that about 40% of 50,000 people who graduate from universities or technical colleges emigrate each year, according to a study by Business Roundtable Portugal and Deloitte based on official statistics, costing Portugal billions of euros in lost income tax revenue and social security contributions.
DEMOGRAPHIC HELL
"This is not a country for young people," said Pedro Ginjeira do Nascimento, executive director of Business Roundtable Portugal, which represents 43 of the largest companies in the nation of 10 million people. "Portugal is experiencing a true demographic hell because the country is unable to create conditions to retain and attract young talent."
Internal migration within the EU is partly driven by the disparity in wages between its member states. Some economic migrants also say they are looking for better benefits such as pensions and healthcare and less rigid, hierarchichal structures that give more responsibility to those in junior roles.
Concerns are mounting over the long-term viability of Europe's economic model with its rapidly ageing population and failure to win substantial shares of high-growth markets of the future, from tech to renewable energy.
Presenting a raft of reform proposals aimed at boosting local innovation and investment, former European Central Bank chief Mario Draghi said in September the region faced a "slow agony" of decline if it did not compete more effectively.
Eszter Czovek, 45, and her husband are moving from Hungary to Austria, where workers earn an average 40.9 euros ($29.95) per hour compared to 12.8 euros per hour in Hungary, the largest wage gap between neighboring countries in the EU.
The number of Hungarians living in Austria increased to 107,264 by the beginning of 2024 from just 14,151 when Hungary joined the EU.
Czovek's husband, who works in construction, was offered a job in Austria, while she has worked in media and accounting at various multinationals. She cited better pay, pensions, work conditions and healthcare as motives for moving. She also mentioned her concern over the political situation in Hungary, which she fears might join Britain in leaving the EU.
"There was a change of regime here in 1989 and 30 years later we are still waiting for the miracle that will see us catch up with Austria," Czovek said of the revolution over three decades ago that ended communist rule in Hungary.
Since Brexit, the Netherlands has replaced Britain as a preferred destination for Portuguese talent while Germany and Scandinavian countries are also popular.
Many Europeans still head to the United States in search of better jobs - about 4.7 million were living there in 2022, according to the Washington-based Migration Policy Institute, which nonetheless notes a long-term decline since the 1960s.
In 2023, 4,892 Portuguese emigrated to the Netherlands, surpassing Britain for the first time, which in 2019 received 24,500 Portuguese.
At home, they face the eighth-highest tax burden in the Organization for Economic Co-operation and Development (OECD) even as house prices rose 186% and rents by 94% since 2015, according to property specialists Confidencial Imobiliario.
A single person in Portugal without children earned an average of 16,943 euros after tax in 2023 compared to 45,429 euros in the Netherlands, according to Eurostat.
Portugal will offer under 35s earning up to 28,000 euros a year a 100% tax exemption during their first year of work, gradually reducing the benefit to a 25% deduction between the eighth and tenth years.
Young people would also be exempted from transaction taxes and stamp duty when buying their first home as well as access to loans guaranteed by the state and rent subsidies.
"We are designing a solid package that tries to solve the main reasons why the young leave," Cabinet Minister Antonio Leitao Amaro said in an interview with Reuters.
'THINGS WON'T CHANGE'
Leitao Amaro said he did not know for sure if the tax breaks would work but that his government, which came into office in April, had to try something new.
"If we don't act ambitiously, things won't change and Portugal will continue down this path," he said.
The Italian government has already found that tax breaks used as incentives are costly and open to fraud.
In January, Italy abruptly curtailed its own scheme that was costing 1.3 billion euros in lost tax revenue, even as it lured tech workers such as Alessandra Mariani back home.
Before 2024, returners were offered a 70% tax break for five years, extendable for another five years in certain circumstances. Now, it plans to offer a slimmed-down scheme targeting specific skills after it attracted only 1,200 teachers or researchers - areas where Italy has a particular shortage.
Mariani said the incentives were key to persuading her to return to Milan in 2021 by allowing her to maintain the same standard of living she enjoyed in London.
"Had the opportunity been the same without the scheme, I would not have done it at all," said Mariani, now working at the Italian arm of the same large tech company.
With her tax breaks poised to be phased out by 2026 unless she buys a house or has a child, Mariani faces a drop in salary and she said she's once again eyeing the exit door.