Qatar’s investment arm used its veto power against plans for cooperation between Volkswagen and Israeli defense company Rafael Advanced Defense Systems, according to Bloomberg, citing people familiar with the matter.

Qatar’s investment arm, which holds more than 10% of Volkswagen shares and 17% of voting rights, blocked a proposal to establish a joint venture to manufacture air defense systems at a struggling factory site in Osnabrück, western Germany, according to people who spoke on condition of anonymity because the information is not public.

Rafael’s CEO, Yoav Turgeman, met with government officials in Berlin and representatives from Volkswagen in Wolfsburg last May to discuss details of the planned defense collaboration.

Spokespeople for Qatar’s investment arm, Rafael, and Volkswagen did not respond to Bloomberg’s request for comment. German newspaper Bild was the first to report the news.

The joint venture would have seen the car factory converted to produce military vehicles for a missile defense system. The trucks were to support the mobile air defense system 'Iron Dome,' which belongs to the Israeli government-owned group.

Volkswagen and Israel collaboration

In addition to the Volkswagen plant in Osnabrück, two additional sites could have benefited from the planned collaboration through supply chains. The missiles and key components of the air defense system were to be produced in Israel, then mounted on military trucks manufactured at the German plant.

Relations between Qatar and Israel, which do not formally recognize each other, have deteriorated since the outbreak of the Gaza war in October 2023.

There was also some doubt about whether the German government would support the joint venture with a purchase order, as there is no actual need for additional components within the existing air defense shield, according to one person.

Germany’s multi-layered air defense shield already includes the Israeli-made Arrow 3 system, the US-made Patriot system for high altitudes, and the German-made IRIS-T and Sky Ranger systems for low altitudes.

Rafael had hoped to benefit from the massive funds earmarked for defense spending in Germany, after the ruling coalition led by Chancellor Friedrich Merz lifted borrowing restrictions on military spending and vowed to create the largest conventional army in Europe.

Volkswagen aims to implement a deep restructuring focused on its high-cost sites in Germany. Proposals have included plant closures, along with other potential uses, despite opposition from the company’s labor leaders to these plans.

This content is from Al-Sharq Bloomberg.