Germany's Relations with Israel: Background and Implications for German Middle East Policy

Germany’s Relations with Israel:
Background and Implications
for German Middle East Policy
January 19, 2007
Paul Belkin
Analyst in European Affairs
Foreign Affairs, Defense and Trade

Germany’s Relations with Israel: Background and
Implications for German Middle East Policy
Summary
Most observers agree that moral considerations surrounding the Holocaust
continue to compel German leaders to make support for Israel a policy priority. Since
1949, successive German governments have placed this support at the forefront of
their Middle East policy and today, Germany, along with the United States, is widely
considered one of Israel’s closest allies. Germany ranks as Israel’s second largest
trading partner and long-standing defense and scientific cooperation, people-to-
people exchanges and cultural ties between the two countries continue to grow. On
the other hand, public criticism of Israel in Germany, and particularly of its policies
with regard to the Israeli-Palestinian conflict, appears to be on the rise.
Since the mid-1990s, German policy toward Israel has become progressively
influenced by Germany’s commitment to a two-state solution to the Israeli-
Palestinian conflict. Germany has been one of the single largest contributors to the
Palestinian Authority (PA) and an increasingly vocal advocate for European Union
(EU) engagement in the Middle East. Germany’s September 2006 decision to send
a naval contingent to the Lebanese coast as part of an expanded United Nations
mission after Israel’s July 2006 war with Hezbollah is considered to have
significantly raised German interest in a resolution to the Israeli-Palestinian conflict
and sparked widespread debate within Germany regarding the evolution of the
German-Israeli relationship and Germany’s role in the region. Stating that the Israeli-
Palestinian conflict lies at the root of other challenges in the Middle East, German
Chancellor Angela Merkel has announced her intention to revive international
engagement in the peace process while Germany holds the EU’s rotating presidency
during the first half of 2007.
Given Germany’s long-standing support of Israel and close ties to the United
States, Israeli and Bush Administration officials have generally welcomed the idea
of increased German engagement in the region. For their part, German officials and
politicians assert that their commitment to Israel and active U.S. involvement in the
Israeli-Palestinian peace process remain the paramount drivers of German policy in
the Middle East. However, most experts indicate that Germany will be hard-pressed
to overcome both U.S. inattention stemming from a perceived preoccupation with
Iraq, and diminished support for Israel and the United States among other EU
member states, to forge a revived transatlantic approach to the peace process.
Furthermore, the presence of German troops in Lebanon, growing public opposition
to Israeli policies and Germany’s commitment to a European approach lead others
to highlight a growing potential for divergence between German policy on the one
hand and Israeli and U.S. policies on the other.
This report will be updated as events warrant. For related information, see CRS
Report RL31956, European Views and Policies Toward the Middle East; CRS
Report RL33476, Israel: Background and Relations with the United States; and CRS
Report RL33530, Israeli-Arab Negotiations: Background, Conflicts, and U.S. Policy.

Contents
In troduction ......................................................1
Historical Context.................................................2
Normalization of Relations......................................3
Current German-Israeli Relations.....................................4
Economic Relations ...........................................4
Scientific, Societal and Cultural Ties...............................4
Defense Cooperation...........................................5
Counter-Terrorism Cooperation ..................................6
Areas of Israeli Concern.........................................7
Germany and the Palestinians................................8
Implications for German Middle East Policy.............................9
Current Middle East Policy Issues................................10
The Israel-Lebanon conflict.................................10
The Israeli-Palestinian Conflict..............................11
Iran ....................................................13
Iraq ....................................................13
Transatlantic Implications..........................................14
Areas of Congressional Concern.................................16

Germany’s Relations with Israel:
Background and Implications for
German Middle East Policy
Introduction
Along with the United States, Germany is widely considered one of Israel’s
closest allies. Germany’s commitment to Israel’s sovereignty and security has
historically been the strongest influence on its policy in the Middle East and a key
factor in its cooperation with the United States in the region. However, debate
surrounding Israel’s August 2006 request for German ground troop participation in
a United Nations (U.N.) mission on the Israeli-Lebanese border, increasing German
advocacy for a more proactive European Union (EU) role in the Middle East, and
shifting perceptions of Israel in the German public have brought attention to what
many consider a changing role for Germany. Indeed, the October 2006 deployment
of a German naval contingent off the Lebanese coast marks the first time German
troops have been stationed so close to Israeli soil, and German leaders have
announced their intention to work toward reviving European and international
engagement in the Israeli-Palestinian peace process during Germany’s EU presidency
in the first half of 2007.
Given Germany’s long-standing support of Israel and close ties to the United
States, Israeli and Bush administration officials have generally welcomed the idea of
increased German engagement in the Middle East. For some analysts, Germany’s
leading role in the EU and consistent commitment both to Israel and U.S.
involvement in the peace process suggest that Germany will become an ever-more
important partner for Israel and the United States. On the other hand, the presence
of German troops in Lebanon, growing public opposition to Israeli policies and
Germany’s commitment to a common European approach prompt others to
emphasize an increasing potential for divergence between German policy on the one
hand and Israeli and U.S. policies on the other.

Historical Context¹
The Federal Republic of Germany (West Germany) and Israel established formal
diplomatic relations in May 1965. However, German policy towards Israel during the
preceding 13 years, beginning with the Luxembourg Reparations Agreement of 1952,
set the tone for what continues to be widely considered a special relationship. After
taking office in 1949, West Germany’s first Chancellor, Konrad Adenauer, pursued
a foreign policy rooted in the belief that the legitimacy of the young German state
depended largely on its willingness to atone for atrocities perpetrated by the National
Socialist (Nazi) regime of Adolf Hitler. Accordingly, his policies were motivated by
a perceived moral obligation to support the Jewish state. The cornerstone, enshrined
in the Luxembourg Agreement, was a long-term commitment to provide
unprecedented financial reparations to the state of Israel and restitution and
compensation to individual victims of Nazi persecution.
In the Luxembourg Agreement, West Germany agreed to pay 3 billion
Deutschmark ($715 million) to the state of Israel and 4.5 million DM ($110 million)
to Jewish organizations represented by the Conference on Jewish Material Claims
Against Germany (Claims Conference), which were helping resettle Jews outside of
Israel. Germany subsequently enacted legislation mandating direct compensation to
individual victims of Nazi crimes. The German government continues to make
payments to individuals, mostly by way of pension contributions, and estimates that
some 40%, or over 25 billion Euros (approximately $32.5 billion), of German
reparations and compensation have gone to the state of Israel or individuals living in
Israel.² In 1992, two years after German unification, the government expanded its
compensation laws to include individuals previously denied compensation by the
former German Democratic Republic (East Germany).
According to historians, while the United States supported the idea of German
reparations, American officials were unwilling to impose additional financial burdens
on the young German state so soon after World War II and urged Israel to negotiate³
directly with Germany. Indeed, reparations to Israel were neither required by the
international community nor wholeheartedly endorsed by the German and Israeli
people. Most agree that German support for Israel arose largely due to the individual
efforts of Adenauer and Israeli Prime Minister David Ben-Gurion. Beginning in
1957, the two leaders enhanced relations by establishing military ties, avoiding
considerable domestic and international opposition by keeping arms shipments

¹ For more information on the history of German-Israeli relations see Lily Gardner Feldman,
The Special Relationship Between West Germany and Israel. Winchester, Mass: Allen &
Unwin. 1984; George Lavy, Germany and Israel, Moral Debt and National Interest.
Portland, OR: Frank Cass. 1996; Yves Pallade, Germany and Israel in the 1990s and
Beyond: Still a ‘Special Relationship’? Frankfurt am Main: Peter lang GmbH. 2005.
² German Federal Foreign Office Country Report on Israel. Updated April 2006.
[http://www.auswaertiges-amt.de/diplo/en/Laender/Israel.html]. Accessed on Nov. 3, 2006.
German Federal Foreign Office Background Paper, “German Compensation for National
Socialist Crimes,” 1998. [http://www.germany.info/relaunch/info/archives/background]
Accessed on Jan. 6, 2007.
³ Lavy, op. cit., pp. 1-13.

secret. In 1964, German newspaper reports exposed arms shipments to Israel, setting
off crises both within and between Germany, Israel and the Arab world. Ultimately,
West Germany suspended the shipments. However, both to make up for this loss and
to address increasing public and political pressure, Adenauer offered to establish
formal diplomatic relations with Israel in March 1965. Until this point, he had
resisted renewing an initial 1952 offer of diplomatic ties, fearing retaliation from the
Arab world.
Normalization of Relations
The decades following the 1965 establishment of diplomatic relations were
marked largely by a German desire to be seen as a neutral actor in the Middle East,
providing balanced, rather than special support to Israel. Simultaneously, and away
from the public eye, successive German leaders sought to fulfill a greater moral
commitment to Israel, as had been initiated in Adenauer’s policies. Publicly,
however, leaders tended to speak increasingly of German neutrality and, beginning
in the 1970s, avoided pressure to take sides in conflicts involving Israel by
advocating common European Economic Community (EEC) positions.⁴
Although Germany opposed a 1956 U.S.-supported U.N. initiative to impose
sanctions on Israel following the Suez crisis, Germany did not openly support Israel
in the 1967 war and resisted calls to come to Israel’s aid during the early stages of
the 1973 Yom-Kippur War, at least publicly claiming neutrality in the conflict. After
the ensuing Arab oil embargo, German policy increasingly reflected its dependence
on Arab states, both as a destination for German exports and, more importantly, as
the source of 85% of German oil.⁵
Nonetheless, Germany appears to have successfully maintained its strong
relations with Israel by providing substantial economic assistance, continuing to
nurture defense and intelligence cooperation and by working to soften or even oppose
EEC positions. After having claimed neutrality during the Yom-Kippur War, it was
revealed that Germany had been allowing the United States to use its Bremerhaven
port to resupply Israel. Although Germany supported a 1973 EEC resolution urging
Israel to retreat to pre-1967 borders, in the late 1970s, it abstained from U.N. votes
on the right of Palestinian self-defense and on granting observer status to the
Palestinian Liberation Organization (PLO). In 1980, though West Germany signed
the EEC’s Venice Declaration endorsing Palestinian self-determination, German
officials are reported to have successfully blocked initiatives to include direct
reference to the PLO.⁶ While the Venice Declaration and other EEC positions were
certainly viewed as less favorable toward Israel than previous German policy,
Germany maintained Israeli trust as a strong ally within Europe.

⁴ The EEC was the precursor to today’s European Union; Gardner Feldman, op. cit., Ch. 7.
⁵ Gardner Feldman, op. cit., p. 203.
⁶ Lavy, op. cit., p. 197; Gardner Feldman, “Germany’s ‘Special Relationship’ with Israel
Continues Despite Appearances to the Contrary,” AICGS Advisor, May 6, 2004.
[http://www.aicgs.org/analysis/c/feldmanc.aspx]. Accessed Oct. 30, 2006.

Current German-Israeli Relations
German reparations and compensation for crimes committed during the
Holocaust and long-standing defense and scientific cooperation continue to represent
the cornerstone of a robust German-Israeli bilateral relationship. However, as
memory of the Holocaust fades and public criticism of Israeli policies increases, the
countries have focused on expanding cultural and broader societal exchanges.
Economic Relations⁷
With bilateral trade worth 3.7 billion Euros (approximately $4.8 billion),
Germany is Israel’s second largest trading partner after the United States. However,
given the comparatively small size of the Israeli market relative to Germany’s main
export markets, most agree that economic considerations do not play a decisive role
in German policy towards Israel. Though it is increasing, German direct investment
in Israel also is not considered particularly significant. In fact, former Israeli
Ambassador to Germany Avi Primor has identified increased German investment as
an area of primary importance for the future of German-Israeli relations and some
analysts suggest that security concerns regarding the Israeli-Palestinian conflict
represent the primary obstacle to greater investment.⁸ Conversely, Israeli investment
in Germany is reportedly rising, with more than 40 Israeli companies based in
Germany as of 2005. In 2005, business associations from both countries established
the German-Israeli Business Council to stimulate business relations. Germany has
also been a strong advocate of preferential trade agreements between Israel and the
EU.⁹
Scientific, Societal and Cultural Ties
Cooperation between German and Israeli scientists began as early as 1961 —
four years before the establishment of diplomatic relations — and has grown into a
pillar of bilateral relations. According to the German government, Germany, after
the United States, is the second largest sponsor of scientific research in Israel, and
German scientists represent the largest group of foreign scientists working in Israel.¹⁰
The primary vehicle for German-Israeli scientific cooperation is the Minerva

⁷ Information on bilateral economic relations from the German Federal Foreign Office
Country Report on Israel, op. cit.; and Asseburg, Muriel, “German-Israeli Relations:
Achievements and Challenges for the Future.” Working Paper of the German Institute for
International Security Affairs, June 2005. [http://www.swp-berlin.org/]. Accessed October

2006.

⁸ Gardner Feldman, “The Special Relationship: Forty Years of Diplomatic Ties Between
Germany and Israel,” AIGCS Advisor, May 19, 2005. [http://www.aicgs.org/analysis/c/
lgf051905.aspx]. Accessed 10/30/2006; Asseburg, op. cit.
⁹ Gardner Feldman, “Germany’s Policy Toward Israel and the Israeli-Palestinian Conflict:
Continuity and Change.” In German Foreign Policy and the Middle East Conflict. German
Foreign Policy in Dialogue, Vol.3, No.7, May 2002.
¹⁰ German Federal Foreign Office, op. cit.

Foundation, which receives annual funding from the German government and
supports projects administered by Israel’s Weizmann Institute.
Particularly as memory of the Holocaust fades among younger generations of
Germans and Israelis, leaders on both sides have emphasized the need for strong
people-to-people exchanges and Holocaust education. There are currently over 100
“sisterships” between German and Israeli towns, and up to 10,000 youth and
volunteers from both countries participate in exchange programs each year.¹¹
Cultural exchange between the two countries has been historically slow to develop,
but has grown substantially over the past decade. This includes efforts to promote
the German language in Israel and agreements to jointly promote Holocaust
education.¹² Over 100,000 Jews now live in Germany and are reported to make up
the world’s most rapidly growing Jewish population. The vast majority of these Jews
have come from the former Soviet Union since 1990.¹³
Defense Cooperation
Historical accounts reveal that robust, but highly secretive military and
intelligence cooperation between Germany and Israel resumed in the late 1960s, not
long after the West German government suspended covert arms shipments in 1964.
The select group of German officials overseeing the arms trade considered secrecy
vital both to avoid scrutiny under a law banning German arms exports to areas of
potential conflict, and perhaps more importantly, to avert negative consequences in
relations with the Arab world.¹⁴ Despite these risks, successive German leaders have
remained committed to far-reaching defense cooperation with Israel and Israel
continues to be a top recipient of German military technology.
The extent and precise value of arms shipments to and from Germany through
the mid-1990’s remains unclear, yet analysts assert that German arms played a
considerable role in Israeli military victories in 1967, 1973 and 1982.¹⁵ In response

¹¹ “40 Years of Diplomatic Relations Between Germany and Israel.” German Embassy,
Washington, DC, May 2005.
¹² Gardner Feldman, “Germany’s Policy Toward Israel and the Israeli-Palestinian Conflict:
Continuity and Change,” op. cit.
¹³ U.S. Department of State, Report on Global Anti-Semitism, January 2005.
¹⁴ In response to a question from a member of a 1991 German Parliamentary committee
investigating secret arms shipments to Israel in the early 1990s, the German Defense
Ministry is reported to have provided the following written response: “Since the beginning,
it has been the standard practice of all administrations to publically reveal or explain as little
as possible regarding cooperation with Israel.” Written response of the Ministry of Defense
in a Dec. 10, 1991, parliamentary hearing. Cited in Nassauer and Steinmetz,
“Rüstungskooperation zwischen Deutschland und Israel” (Armament Cooperation Between
Germany and Israel), Berliner Informationszentrum für Transatlantische Sicherheit. (Berlin
Information-Center for Transatlantic Security). September 2003. [http://www.bits.de/public/
researchreport/rr03-1-1.htm]. Accessed December 2006.
¹⁵ Nassauer, Steimetz, op. cit; Shpiro, Shlomo, “Intelligence Services and Foreign Policy:
(continued...)

to Iraqi scud missile attacks on Israel during the Gulf War of 1990-1991, the German
army provided Israel with arms and substantial financial assistance. In 1999 and
2000, in perhaps the most high-profile German arms shipments to Israel since
German unification, Germany financed 50% of the costs for three “Dolphin-class”
submarines designed specifically for the Israeli navy. In August 2006, the German
government committed to deliver and finance one-third of the costs, approximately
1 billion Euros ($1.3 billion), for two more submarines by 2010. Those opposed to
the most recent agreement, primarily members of the Green and Left political parties,
cite widespread concern that Israel plans to reconfigure the submarines to enable
them to launch nuclear missiles. Proponents repeatedly invoke a German obligation
to defend the existence of the state of Israel.¹⁶
Israelis have generally welcomed the continuing defense cooperation with
Germany. In August 2006, the Jerusalem Post reacted to the latest submarine
agreement by writing, “While their grandparents’ generation perpetrated the
Holocaust, and the previous generation paid for the Holocaust with reparations to its
victims, the current generation is helping prevent a second Holocaust by providing
the [Israel Defense Forces] with some of the most important defensive weapons
systems in its arsenal. As far as corrective steps go, that’s a huge one.”¹⁷
Counter-Terrorism Cooperation
Germany and Israel’s respective intelligence agencies, the
Bundesnachrichtendienst (BND) and Mossad, enjoy a history of extensive and often
secretive cooperation dating back to the 1960s, when they began facilitating the arms
trade between the two countries. Counter-terrorism cooperation began in the wake
of the terrorist attack at the 1972 Munich Olympics and has reportedly increased
since September 11, 2001.¹⁸ In 2002, in what was viewed by many as a response to
pressure from Israeli officials, the German government banned the Al-Aqsa charity,
an organization long accused by the Israelis of fund-raising for the Palestinian
terrorist organization Hamas. While many Israelis considered the German
government’s response overdue, most indicate that the action was emblematic of the
close cooperation between Israeli and German authorities. It appears that despite
continued Israeli concerns regarding perceived constraints imposed on counter-terror
operations by German law, cooperation between the countries remains strong.¹⁹

¹⁵ (...continued)
German-Israeli Intelligence and Military Cooperation,” German Politics, Vol. 11, No. 1.
April 2002.
¹⁶ “U-Boot-Verkauf an Israel besiegelt - Debatte über Atomwaffen.” Deutsche Presse
Agentur, Aug. 24, 2006; Pallade, op. cit., pp. 155-168.
¹⁷ “Germany’s Transformation,” Jerusalem Post, Aug. 24, 2006.
¹⁸ Pallade, op. cit., pp. 83-90. For more information on German counter-terrorism policy see
CRS Report RL32710, Germany’s Role in Fighting Terrorism: Implications for U.S. Policy,
by Francis T. Miko and Christian Froehlich. December 2004; and U.S. Department of State,
“Country Reports on Terrorism 2006.”
¹⁹ Pallade, op. cit.; “Israel’s Foreign Relations, the Israel-German special relationship,” the
(continued...)

Areas of Israeli Concern
Israeli leaders consistently praise their country’s relations with Germany,
welcoming German advocacy on Israel’s behalf within the EU and internationally,
and the extensive bilateral contacts that have developed since the 1950s. Yet, some
prominent Israelis and members of Germany’s Jewish community express concern
that the historical basis for the strong relationship could be weakening, particularly
as collective memory of the Holocaust recedes. Such concerns focus on a rise in neo-
Nazi activity, anti-Israel and pro-Palestinian sentiment among the German public and
general trends against U.S. policy, unilateralism and military action.
An October 2006 study reported a 20% increase in crimes committed by neo-
Nazis in Germany since 2005. Such crimes had grown by about 10% the previous
year.²⁰ The increase coincides with a political gain for the neo-Nazi National
Democratic Party (NPD), which won seats in the state parliament of the eastern state
of Mecklenburg West Pomerania in September 2006 elections and has held seats in
Saxony’s state legislature since 2004. While most observers believe the NPD will
be voted out of the Saxon legislature in the next elections, the apparent rise of neo-
Nazi movements in German society and political life has elicited criticism and
statements of concern from the President of the Central Council of Jews in Germany
and Israel’s ambassador to Germany.²¹
Asked by an Israeli journalist to address concerns regarding anti-Semitic trends,
Chancellor Angela Merkel responded, “sometimes people are not sufficiently aware
of anti-Semitic tendencies. Therefore, we intend to treat education and training as
a very important component.”²² The German government funds a range of tolerance-
education programs, many of which focus specifically on anti-Semitism and
Holocaust remembrance, including some in collaboration with Israeli organizations,
and continues to provide 24-hour police protection at synagogues and other Jewish
institutions. In addition, the government devotes significant resources to investigating
xenophobic and anti-Semitic crimes and prosecuting their perpetrators. These crimes
often receive broad media attention and public condemnation from the political
establishment.²³
In recent years, increasing public and political opposition to Israeli policies in
the Middle East has illuminated a long-standing tension in German society between
Germany’s special commitment to the state of Israel and German criticism of the

¹⁹ (...continued)
British Israel Communication Centre, Nov. 23, 2005. [http://www.bicom.org.uk/
publications/israels_foreign_relations/]. Accessed October 2006.
²⁰ “Right-Wing Violence on the Rise,” Spiegel Online, Oct. 17, 2006.
²¹ Interviews of German officials, October-December 2006; “Right-Wing Violence on the
Rise,” op. cit.; “German Jewish Leader: neo-Nazi attacks just like in Hitler era,” EJ Press,
Oct. 24, 2006.
²² Adar Primor, “Elections in Germany,” Haaretz, Sept. 14, 2005.
²³ U.S. Department of State “Report on Global anti-Semitism,” op. cit.; U.S. Department
of State International Religious Freedom Report 2006.

policies of Israeli governments. German and Israeli leaders and representatives of
Germany’s Jewish community consistently state that such criticism is a natural part
of any healthy bilateral relationship. However, in reaction to alleged media bias and
strong opposition from German politicians to Israeli bombings during Israel’s July
2006 war with Hezbollah, the leader of the German Jewish Council alleged an
“absolutely hostile attitude towards Jews and Israel,” in Germany.²⁴ In a survey taken
shortly after the end of the conflict, 75% of Germans indicated they considered the
Israeli action to be “disproportionate.”²⁵ This compared to 63% of British who
indicated the action was “inappropriate and disproportionate” and 50% of Americans
who reported Israeli action as “justified.”²⁶
Germany and the Palestinians. Until the 1993 Oslo Peace Accords and
the subsequent creation of the Palestinian Authority (PA), Germany was one of
Europe’s most cautious supporters of
Palestinian self-determination.
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and European aid to the Palestinian
people and in specific instances, have
even requested German aid.
²⁴ Interview with German Jewish Council President Charlotte Knobloch. Spiegel Online,
Aug. 31, 2006.
²⁵ Forsa Insitute poll for Stern magazine, July 13-14, 2006.
²⁶ “Americans Believe Israeli Actions are Justified but Share International Reservations
about Extent of Military Offensive.” World Public Opinion.org, 8/2/2006.
[http://www.worldpublicopinion.org]. Accessed Nov. 7, 2006.

Implications for German Middle East Policy
Successive German governments have prioritized support for Israel as a
cornerstone of German policy in the Middle East. During the Cold War, Germany
tended to express this support quietly, favoring covert financial and military support
over vocal political backing. However, since unification and during a period of
European integration and unprecedented EU expansion, Germany has emerged as an
increasingly proactive advocate for greater EU engagement in the Middle East.
German leaders have become vocal supporters of a two-state solution to the Israeli-
Palestinian conflict. Former Foreign Minister Joschka Fischer’s 2002 push to
revitalize the peace process is considered by many to have been both a significant
first step towards the 2003 “Performance-based Roadmap to a Permanent Two-State
Solution to the Israeli-Palestinian Conflict” (Road Map) and a turning point in
Germany’s role in the region. While some Israelis are skeptical of increased EU
influence, most appear to continue to view Germany as a strong and reliable partner
within a union of countries generally considered less sympathetic to Israel, and have
welcomed a more proactive German role in driving EU policy. For its part, Germany
seeks to carry out its support of Israel within the overarching framework of the EU’s
Common Foreign and Security Policy (CFSP).
Despite periods of increased tension between Germany and Israel, leaders on
both sides continue to characterize the relationship as an essential component of their
foreign policy. In the past decade, Germany has extended political support to Israel
largely through its advocacy within the EU. In 2002, despite having temporarily
suspended arms shipments to Israel in response to Israeli actions during the Al-Aqsa
Intifadah, Germany is reported to have successfully blocked proposals for EU
sanctions against Israel. In 2004, although Germany ultimately endorsed the EU’s
official opposition to Israel’s security fence in the West Bank, German Interior
Minister Otto Schily and other prominent officials openly supported Israel’s²⁷
decision. During Israel’s July 2006 conflict with Hezbollah in Lebanon, Germany
and the United Kingdom were the only two EU member states officially opposed to²⁸
an immediate cease-fire. And, in November 2006, Germany is reported to have
joined the Czech Republic and the United Kingdom in blocking public EU²⁹
condemnation of Israel’s military operation in the Gaza Strip.
While distinguishing itself as a strong supporter of Israel within the EU,
Germany appears to have maintained the trust of Palestinians and other groups in the
region traditionally opposed to Israeli objectives. After a Tel Aviv nightclub
bombing in 2001, Foreign Minister Fischer is reported to have shuttled between PLO
leader Yasser Arafat and Israeli Prime Minister Ariel Sharon, successfully eliciting

²⁷ “German Minister Justifies Israeli Barrier,” Deutsche Welle, Sept. 14, 2004.
²⁸ After long deliberation, EU members unanimously agreed on compromise language
calling for an, “immediate cessation of hostilities.” “Germany Backs Britain’s Refusal to
Call for Ceasefire,”The Guardian , Aug. 1, 2006; “Israel Seeks German Aid in Getting
European Support,” International Herald Tribune, July 22, 2006.
²⁹ “EU Foreign Ministers Split on Response to Beit Hanun Deaths,” Haaretz, Nov. 13, 2006.

restraint from Sharon and condemnation of the bombing from Arafat.³⁰ Analysts also
cite the success of German negotiators in facilitating highly delicate prisoner
exchanges between the Israeli government and Hezbollah in 1996 and 2004 as
evidence of the trust Germany enjoys from both Hezbollah and the Israelis. More
recently, a German negotiator is reportedly mediating between Israel and Hezbollah
for the release of two Israeli soldiers kidnaped in July 2006.³¹
Current Middle East Policy Issues
Chancellor Angela Merkel and Foreign Minister Frank Walter Steinmeier took
office in November 2005 promising continuity in a German Middle East policy based
on a commitment to protect Israel’s right to exist; support for a two-state solution to
the Israeli-Palestinian conflict; a commitment to a European framework for peace;
and a belief that U.S. engagement in the region is essential. Since the historic
deployment of German troops to the Lebanese coast in October 2006, Merkel and
Steinmeier have increased their calls for revived U.S. and Quartet engagement in the
Israeli-Palestinian peace process, joining other European leaders in asserting that the
conflict lies at the root of many of the other challenges in the Middle East. Germany
has been active in international negotiations aimed at curbing Iran’s nuclear
ambitions and, despite continuing to rule out a German troop deployment to Iraq,
some German leaders have indicated a willingness to increase German support for
Iraqi reconstruction efforts and initiatives to train Iraqi security forces.
While Israeli and U.S. officials appear to welcome increased German
engagement in the region, both Israel and the United States have expressed
disapproval of German efforts to engage Syria in the Arab-Israeli peace process, and
have reacted skeptically to German-supported proposals to link the resolution of
other major disputes in the region to the Israeli-Palestinian peace process.
The Israel-Lebanon conflict.³² At Israel’s and Lebanon’s request, in
September 2006 the German Parliament authorized a German naval deployment of
up to 2,400 soldiers as part of the expanded United Nations Interim Force in Lebanon
(UNIFIL). Germany now leads a contingent tasked with monitoring the Lebanese
coast to prevent weapons smuggling to Hezbollah forces in Lebanon. The decision
to deploy troops so close to Israel — unprecedented in German history — followed
several months of widespread debate, which illuminated both the continuing
sensitivity surrounding German policy towards Israel and growing German interests
in the region. Ultimately, German participation in UNIFIL has increased domestic
pressure on Merkel to push for a political solution to the broader Arab-Israeli
conflict.

³⁰ Gardner Feldman, “Germany’s Policy Toward Israel and the Israeli-Palestinian Conflict:
Continuity and Change,” op. cit.
³¹ “German Mediates Between Israel and Shiite Militants,” Spiegel Online, Oct. 23, 2006;
“Germany Offers ME Mediation; BND Said Involved in Attempts to Release Israelis,” Die
Welt, July 21, 2006, accessed through OpenSource Center on Nov. 3, 2006.
³² For more information, see CRS Report RL33566, Lebanon: The Israel-Hamas-Hezbollah
Conflict, coordinated by Jeremy M. Sharp.

At the outset of discussions regarding European contributions to UNIFIL,
Merkel and other leading German politicians all but ruled out a military role for
Germany, highlighting strong discomfort with the idea of German soldiers being in
a position to confront Israeli troops. However, a direct request for ground troops
from Israeli Prime Minster Ehud Olmert compelled Germany to reconsider its stance
and was a key factor in the decision to deploy the naval contingent.
Although Germany ruled out sending ground troops, members of both governing
political parties, and particularly the Social Democrats (SPD), expressed a surprising
willingness to consider the option, largely because it had been requested by Israel.
In the end, opposition from the right wing of Merkel’s Christian Democratic Union
and from its sister party, the Christian Social Union, reportedly prevented further
consideration of more robust German engagement.³³ Nonetheless, Olmert’s request
broadened debate within the German political spectrum over Germany’s future role
in the region. In her justification to parliament for the mission, Merkel highlighted
its “historic dimension,” stating that, “it was impossible to overstate the significance
of how much Germany is now trusted,” by Israel and others in the region.³⁴
Since Germany’s naval deployment in October 2006, the actions of Israeli Air
Force jets flying over German vessels have heightened diplomatic tension between
the countries, eliciting official German complaints and Israeli apologies on at least
two occasions, and heightening a widespread belief that a weak U.N. mandate is
rendering the UNIFIL mission ineffective. While Israeli leaders have officially
apologized for a lack of communication during fly-overs, Israel has complained that
conditions requiring German officials to secure approval from Lebanese authorities
before boarding suspicious ships or entering territory within six miles of the
Lebanese coast severely limit Germany’s ability to track potential arms shipments.³⁵
On the other hand, many Germans have taken the actions as evidence of Israel’s lack
of respect and even disdain for the European military presence.³⁶
The Israeli-Palestinian Conflict.³⁷ Chancellor Merkel has announced her
intention to revive Quartet efforts to advance the Israeli-Palestinian peace process

³³ Interviews of German officials, October-December 2006; At the time, Israeli Ambassador
to Germany Shimon Stein characterized Germany’s decision to send a naval contingent
rather than ground troops by saying, “The Germans are still unwilling to put themselves in
a position where German armed soldiers might have to face, or even shoot, an Israeli soldier.
They are accepting the burden of their history, even if we, at least in this instance, are
willing to overlook it.” Quoted in “Ambassador Shimon Stein Tells Post: ‘The Germans
don’t want to face an Israeli soldier’,” Jerusalem Post, Sept. 3, 2006.
³⁴ “Israel vs. Germany: Confrontation off Lebanon Leads to Questions,” Spiegel Online, Oct.

30, 2006.

³⁵ Interviews of German officials, October-December 2006; “Israel’s Criticism of UNIFIL:
No One Will Be Able to Stop Hezbollah,” Spiegel Online, Nov. 2, 2006.
³⁶ French officials have gone so far as to threaten to fire at Israeli jets violating U.N. no-fly
restrictions in southern Lebanon.
³⁷ For more information, see CRS Report RL33530, Israeli-Arab Negotiations: Background,
Conflicts and U.S. Policy, by Carol Migdalovitz.

while Germany acts as the EU’s representative to the Quartet during its EU
presidency in the first half of 2007. However, both she and Foreign Minister
Steinmeier emphasize the necessity of U.S. engagement and leadership to any
successful peace initiative. Observers and German officials expect Germany to
exhaust much of its diplomatic capital in the first half of 2007 seeking to gain
increased U.S. engagement and the backing of European countries that tend to be
less sympathetic toward Israel than Germany and the United States.³⁸
Since Hamas’s victory in January 2006 Palestinian legislative elections,
Germany has remained steadfast in its public commitment to the conditions for
relations with Hamas outlined by the Quartet.³⁹ However, German officials have also
supported Palestinian President Mahmoud Abbas’s efforts to form a national unity
government with Hamas, and some American commentators worry that Europeans
may be more willing than the United States to work with such a government.⁴⁰
Merkel and Steinmeier have demonstrated a desire to broaden the peace process
to include more neighboring states with a stake in the outcome. On several
occasions, Steinmeier has voiced an interest in expanding the Quartet to include
Egypt or other Arab states. Arguing that any sustainable agreement must involve
Syria, Steinmeier met with President Bashar Asad in Damascus in December 2006.
Steinmeier says he urged Asad to cease support for Hezbollah fighters in Lebanon
and use his leverage over Hamas to pressure its officials to cooperate in the peace
process. Despite reports that Merkel was opposed to Steinmeier’s Syria visit, a
possibility made more likely by the fact that the two represent different political
parties, she subsequently defended the decision, citing the need to demonstrate a
readiness for dialogue with all stake-holders in the region.⁴¹
Israeli Prime Minister Ehud Olmert has pledged support for the Road Map and
Germany’s role in realizing it, even welcoming the efforts of moderate Arab states
to move the process forward.⁴² However, he openly criticized Steinmeier for
traveling to Damascus and is skeptical of a German-supported proposal to discuss the
Israeli-Palestinian conflict as part of a broader international conference on Iraq.⁴³
The Bush Administration, which accuses Syria of supporting terrorist organizations
and of involvement in the 2005 killing of former Lebanese Prime Minister Rafik
Hariri, has consistently opposed dialogue with Syria.

³⁸ Interviews of German officials, October-December 2006.
³⁹ The requirements stipulated by the Quartet are recognition of Israel’s right to exist,
renunciation of terrorism, and acceptance of previous Israeli-Palestinian agreements.
⁴⁰ “Berlin Aims to Revive Mideast Quartet,” Financial Times, Nov. 11, 2006.
⁴¹ Interviews of German officials, October-December 2006; “Germany’s Merkel Says Search
for Mideast Peace May Require ‘Unusual Steps,’” International Herald Tribune, Dec. 14,

2006.

⁴² “Germany, Israel See Eye-to-Eye on Palestinians, Iran,” International Herald Tribune,
Dec. 11, 2006.
⁴³ “Israeli Military Doesn’t Rule Out Military Strike on Iran,” Der Spiegel, Dec. 11, 2006;
“PM Olmert Criticizes German FM Steinmeier for Traveling to Syria,” Haaretz, Dec. 12,

2006.

Iran.⁴⁴ As a member of the so-called EU-3 (France, Germany and the United
Kingdom), Germany has been a proponent of EU and multilateral efforts to prevent
Iran from developing nuclear weapons and was an architect of December 2006 U.N.
Security Council Resolution 1737 imposing sanctions on Iran for its refusal to⁴⁵
comply with previous Security Council decisions regarding its nuclear program.
German officials speak forcefully on the importance of curbing Iranian nuclear
ambitions and, despite strong opposition from business associations, Merkel and
Steinmeier have indicated a willingness to consider more stringent economic
sanctions in the case of continued Iranian obstinance. On the other hand, Germany
has demonstrated a commitment to international unity, suggesting that it may be
more willing to accept compromises in exchange for U.N. Security Council
unanimity rather than take unilateral measures in the face of Chinese or Russian
opposition. Indeed, some German officials who favor more stringent sanctions assert
that such measures will be ineffective without Russian and Chinese support.⁴⁶
Merkel has been unequivocal in her opposition to a military response to the crisis.
Israel views Iran as its most formidable enemy and an existential threat. While
it has welcomed international efforts to curb the Iranian nuclear program, Israeli
officials have called on the international community to take more assertive steps.
Prime Minister Olmert has specifically urged a stronger German stance, citing
Germany’s moral obligation to confront Iran and concern regarding German
government support of companies with significant business interests in Iran.
German-Iranian trade in 2005 was valued at close to $6 billion, making
Germany Iran’s second largest European trading partner after Italy. During a
December 2006 visit to Berlin, Olmert reportedly pressured Merkel to cease⁴⁷
government loan guarantees to companies doing business in Iran. Taking a similar
approach, the United States Treasury Department has urged Germany to stem what
it claims is the illicit exploitation of German and other European banking systems by
Iranian companies involved in financing terrorist activities.⁴⁸
Iraq.⁴⁹ Since opposing the U.S. decision to invade Iraq in 2003, Germany has
ruled out sending troops to Iraq and has limited its efforts to promote stability in the

⁴⁴ For more information, see CRS Report RL32048, Iran: U.S. Concerns and Policy
Responses, by Kenneth Katzman.
⁴⁵ The EU-3 began negotiations with Iran in 2003. In 2006, China, Russia and the United
States joined the diplomatic efforts, forming the so-called P-5+1; For full text and more
information on U.N. Security Council Resolution 1737, see U.N. Security Council document
SC/82.
⁴⁶ Interviews of German officials, October-December 2006.
⁴⁷ “Israel Angry Over German Loans to Iran,” Jerusalem Post, Dec. 10, 2006 ; “Israel’s
Olmert Calls for Dramatic Measures Against Iran,” Reuters News, Dec. 9, 2006.
⁴⁸ “U.S. Asks Finance Chiefs to Limit Iran’s Access to Banks,” The New York Times, Sept.
17, 2006; “U.S. Severs Links to Iranian Bank Over Nuclear Program,” International Herald
Tribune, Jan. 10, 2007.
⁴⁹ For more information, see CRS Report RL33793, Iraq: Regional Perspectives and U.S.
Policy, coordinated by Christopher M. Blanchard.

country to training Iraqi police and military forces in the United Arab Emirates and
providing financial assistance for civilian reconstruction and debt relief within the
framework of the Paris Club.⁵⁰ While continuing to rule out a German troop
deployment, German leaders, particularly within Merkel’s Christian Democratic
Union, indicate a growing willingness to increase German support of stabilization
and reconstruction efforts, though concrete proposals have yet to be put forth.
Both Merkel and Steinmeier have endorsed the U.S. Iraq Study Group report,
and have expressed support for an international conference on Iraq that would
include discussion of other disputes in the region, including the Israeli-Palestinian
conflict. Merkel has said a “comprehensive diplomatic initiative” as envisioned in
the Iraq Study Group report could make an important contribution to stabilizing the
Middle East as a whole.⁵¹ In a December 2006 meeting, Secretary of State
Condoleezza Rice reportedly reacted skeptically to Steinmeier’s proposal for German
assistance for such an initiative.⁵² Israeli Prime Minister Olmert has opposed the idea
of including the Israeli-Palestinian conflict on the agenda of a broader international
conference, saying, “the best way to advance our relations with the Arabs is by means
of bilateral negotiations.”⁵³
Transatlantic Implications
The United States and Germany share several national security interests and
policy priorities in the Middle East. Germany’s commitment to Israel’s sovereignty
and security remains the strongest influence on its policy and a key factor in its
cooperation with the United States. As noted above, the two countries are widely
considered Israel’s closest allies and both share a commitment to a two-state solution
to the Israeli-Palestinian conflict and to preventing Iran from developing nuclear
weapons. Moreover, both the U.S. and Germany consider terrorism, radical Islamic
fundamentalism, and the proliferation of weapons of mass destruction, particularly
to Iran, the primary threats to national security.
At times, however, Germany tends to favor different policy approaches to
realizing these objectives. In the Middle East, Germany’s emphasis on diplomatic
engagement and dialogue over military measures and isolation suggests a greater
willingness to engage traditional adversaries of the United States and Israel such as
Syria and Iran in search of diplomatic solutions. Merkel’s call for a comprehensive
diplomatic initiative indicates a desire to link discussion of the Israeli-Palestinian and
Israel-Lebanon conflicts to discussion of security in Iraq, to which both Israel and key
figures in the Bush administration have reacted skeptically. The presence of German

⁵⁰ The Paris Club is an informal group of 19 creditor nations that seeks to alleviate payment
difficulties facing debtor nations.
⁵¹ “Germany’s Merkel Advocates ‘Comprehensive Diplomatic Initiative Over Iraq,”
Associated Press Newswires, Dec. 9, 2006.
⁵² “‘Splitting Iraq Would Lead to Terrible Bloodshed’- Interview with Germany’s Foreign
Minister,” Spiegel Online, Dec. 12, 2006.
⁵³ “Israeli Military Doesn’t Rule Out Military Strike on Iran,” op. cit.

troops off the Lebanese coast and increasing criticism regarding the strength of their
mandate are fueling German calls to offer Syria concessions within the framework
of a broader dialogue.⁵⁴ Proponents of such an approach argue that cooperation with
Syria is essential to achieving stability in Lebanon and cooperation from Hamas, and
can only be achieved through constructive dialogue.
Although Merkel has joined Europan leaders in advocating dialogue with Syria
and Iran and increased EU engagement in the Israeli-Palestinian conflict, Germany
and most EU member states remain dedicated to securing robust U.S. engagement
in any peace proposal. Numerous analysts assert that Germany is unlikely to assume
a leadership role in the peace process without strong U.S. backing. However, calls
for EU-led initiatives from Spain, France and Italy indicate ongoing European
frustration with perceived U.S. inattention to the peace process. This leads many
analysts to predict that Germany will be hard-pressed to forge European and
transatlantic consensus during its EU-presidency, let alone lead a revived Quartet
initiative. Accordingly, German diplomats are careful to dampen expectations of
Germany’s ability to drive the peace process.⁵⁵
Merkel has shown no signs of deviating from Germany’s traditional support for
Israel and, if anything, has displayed a tendency to be less critical of Israeli policies
than her predecessor Gerhard Schröder. Nonetheless, growing criticism within the
German media and Germany’s political classes, and high public disapproval of Israeli
action during its July 2006 incursion into Lebanon, suggest a growing willingness to
challenge Israeli policies. Furthermore, the presence of German troops in the region
has significantly raised Germany’s interest in seeing a peaceful resolution to Israeli-
Arab conflicts. These factors and Germany’s commitment to a stronger EU foreign
policy are taken by some as indications of increasing potential for divergence
between German policy on the one hand and U.S. and Israeli policies on the other.
On the other hand, German officials and politicians consistently assert that
Germany’s commitment to Israel and a common transatlantic approach to the Arab-
Israeli peace process will continue to remain the paramount drivers of German policy
in the region.⁵⁶ Indeed, a historical perspective on Germany’s relationship with Israel
indicates that German leaders have consistently chosen to support Israel — whether
militarily, financially or politically — despite periods of public, political or even
international opposition. This support, however, has often been carried out
secretively. In fact, historical accounts suggest that German success in maintaining
relatively positive relations on both sides of the Arab-Israeli conflict has depended
largely on its ability to avoid a high-profile leadership role in the region.

⁵⁴ For example, some German officials have advocated offering to initiate negotiations on
the return of the Golan Heights to Syria.
⁵⁵ Interviews of German officials, October-December 2006; “U.S. Has High Expectations
of German EU and G-8 Presidencies,” International Herald Tribune, Dec. 26, 2006.
⁵⁶ Interviews of German officials, October-December 2006.

Areas of Congressional Concern
Aspects of Germany’s relations with Israel intersect with congressional
concerns, especially with respect to policy issues in the Middle East. Recent relevant
examples include congressional perspectives on Hezbollah and international
assistance to the Palestinians. Members of Congress have repeatedly called on the
European Union to classify Hezbollah as a terrorist organization. In March 2005,
both the House and Senate passed resolutions (H.Res. 101 and S.Res. 82) urging the
EU to add Hezbollah to its list of terrorist organizations. In July 2006, as fighting
between Hezbollah and Israel escalated, 200 Members of the House signed a letter
to EU High Representative for Common Foreign and Security Policy Javier Solana
reiterating their request. The EU has not designated Hezbollah as a terrorist
organization because some member states view it as playing an important social and
economic role in Lebanon or as a legitimate political entity represented in the
Lebanese parliament and cabinet. EU and German officials indicate that such a
designation is unlikely as long as EU member states are negotiating with the
Lebanese government as part of the UNIFIL force currently maintaining a cease-fire
in southern Lebanon.
Unlike some EU member states, such as the United Kingdom, which has placed
Hezbollah on its terrorist list, Germany does not maintain an independent national
list of terrorist organizations, choosing instead to adopt the common EU list.
Composition of the EU list is agreed on unanimously and deliberations remain secret.
Although most observers assert that the French government has been the strongest
European opponent to classifying Hezbollah as a terrorist organization, German
officials indicate that they would likely support such a designation.
Members of Congress also remain concerned about EU aid to the Palestinians.
Congress has enacted a series of measures to restrict U.S. funding for the Palestinian
Authority.⁵⁷ As noted previously, Germany has been one of the largest donors to the
PA, and has provided direct assistance to the Palestinian people through the EU’s
Temporary International Mechanism (TIM) since July 2006. After Hamas’s victory
in parliamentary elections in January 2006, Chancellor Merkel was one of the first
European leaders to back Quartet conditions for the provision of EU aid and
negotiations with Hamas. Nonetheless, some observers have voiced concern that
Germany and other European states may be more willing than the United States to
show flexibility in their commitment to these requirements, particularly in exchange
for Hamas cooperation in a potential national unity government or in peace talks. In
response to such allegations, German officials consistently cite a steadfast German
commitment to the Quartet principles.

⁵⁷ See CRS Report RS22370, U.S. Foreign Aid to the Palestinians, by Paul Morro.