Qatar’s sovereign wealth fund has vetoed a joint venture between Volkswagen AG and Israel’s Rafael Advanced Defense Systems to produce military vehicles for the Iron Dome air defense system, according to Bloomberg. The project aimed to save hundreds of jobs at Volkswagen’s struggling plant in Osnabrueck, western Germany.
Qatar Investment Authority, which holds over 10 percent of Volkswagen shares and 17 percent of voting rights, blocked the proposal to establish a joint venture with Rafael at the automaker’s underperforming factory. The plant would have shifted from car production to building trucks supporting the mobile air defense system owned by the Israeli state-owned company.
Rafael’s CEO, Yoav Tourgman, met with German government officials in Berlin and Volkswagen representatives in Wolfsburg in May to discuss the planned defense collaboration. – We are exploring further industrial partnerships in Germany. Discussions regarding specific locations and potential partners are confidential and have not been finalized – a Rafael spokesperson said.
Geopolitical tensions and business interests
Relations between Qatar and Israel, which do not formally recognize each other, have deteriorated since the outbreak of the war in the Gaza Strip in October 2023, triggered by the Hamas attack on Israel. The Qatari fund’s veto reflects the deep political rift, even as Volkswagen sought a strategic pivot to defense manufacturing to salvage its loss-making Osnabrueck facility.
Under the plan, missiles and key components of the Iron Dome system would be produced in Israel, while the military trucks would be assembled in Germany. Two additional locations could benefit from the supply chain, but the entire project hinged on QIA’s approval as a major shareholder.
Uncertainty over German government support
Doubts have also emerged about whether the German government would back the joint venture with procurement orders. Bloomberg reported that the existing air defense umbrella does not require additional components, complicating Rafael’s hope to tap into Germany’s massive new defense fund. Chancellor Friedrich Merz’s coalition recently removed debt limits for military spending, promising to build Europe’s largest conventional army.
For Volkswagen, the failed deal represents a missed opportunity to transform a struggling plant and secure its workforce. The standoff highlights how geopolitical rivalries can override commercial logic, even when billions of euros and thousands of jobs are at stake.
Źródło: Bloomberg, Fot. Marie Selissky / Shutterstock
