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Until this Tuesday you didn’t necessarily have to meet CG Haenel at Suhl. The small company on Schützenstrasse 26 has only a handful of employees, but now CG Haenel has secured an order that could have far-reaching consequences: for Suhl, for the state of Thuringia and for German armaments policy. Surprisingly, Haenel won the tender for the new Bundeswehr assault rifle.
Is a feeling. With its fully automatic MK 556 assault rifle, the company has outperformed the much larger weapons manufacturer Heckler & Koch, the permanent supplier to the German Armed Forces since 1959. It’s like a cup victory for TSV Vestenbergsgreuth against Bayern Munich. The industry is baffled. Because CG Haenel himself seems too small to manufacture so many assault rifles in series. On the contrary, the group behind the company is even more powerful: the Arab state conglomerate Edge.
“A good decision”
There is astonishment in the Thuringian State Ministry of the Interior. Ironically, in the federal state ruled by left-wing Prime Minister Bodo Ramelow, whose party would prefer to ban all arms exports, should an armory be established to compete with Heckler & Koch? And one that is controlled by investors from Abu Dhabi?
It looks like that.
“It is a good decision for the Bundeswehr and for Thuringia that was made here,” Christian Herrgott, a member of the CDU state parliament and reserve chief, told SPIEGEL, noting that the company would now expand.
Must be. And huge.
It’s been a long time since CG Haenel was a great number. Founded in 1840, the company produced the first assault rifle for the Reichswehr during World War II: the StG 44. However, under Soviet occupation, Haenel became a state-owned company. In 2008, the company was reestablished under the previous name, on a very small scale.
According to an annual report available to SPIEGEL, CG Haenel GmbH employed only nine people in 2018 and generated a turnover of only 7.15 million euros. The parent company, Merkel Jagd- und Sportwaffen GmbH, took on the loss of a good 485,000 euros. “Merkel continues the arms-making tradition at Suhl, which dates back to the 15th century,” says Merkel’s annual report. But the company only had 133 employees and had a turnover of 14.3 million euros.
The tender is for about 120,000 assault rifles with an order value of about 250 million euros. That’s more than 35 times CG Haenel’s annual turnover.
In Haenel, the people are silent
How is such a small company supposed to make tens of thousands of assault rifles? At Suhl, people are silent: “This is an ongoing process, we will not comment on it,” says managing director Olaf Sauer.
On Tuesday it was unclear whether the department of defense or the procurement office of the Federal Armed Forces verified Haenel’s business background and performance. In a briefing by Minister Annegret Kramp-Karrenbauer (CDU) for selected defense politicians, Secretary of State for Defense Benedikt Zimmer explained only that the weapons made by Haenel and Heckler & Koch meet the requirements of the Bundeswehr.
In the end, according to Zimmer, Haenel’s offer, which in addition to the acquisition of weapons, also includes permanent maintenance and service work, was simply cheaper. As a result, the Thuringians were elected. According to the participants, Zimmer was not even asked about Haenel’s ties to Abu Dhabi. On Tuesday, the Defense Department asked for a day of patience for more precise answers.
One thing is clear: the tiny Thuringian armory can only handle such a large order with the help of its billionaire owner. CG Haenel and Merkel belong to Edge, the newly created state arms company of the United Arab Emirates (UAE). Last November, the Abu Dhabi government brought together around 25 companies from the fields of military, satellite and communications technology: in a conglomerate with, according to its own statements, 12,000 employees and around five billion dollars in annual sales. Mohamed bin Zayed Al Nahyan, Crown Prince and de facto ruler of the United Arab Emirates, was in charge of the opening.
Big plans in Abu Dhabi
Abu Dhabi’s ruling family has big plans for Edge. There is a lot of money to be made from weaponry, especially in the Gulf region. According to research by the Stockholm research institute Sipri, the UAE was the world’s fifth-largest arms importer between 2009 and 2018, although the country only has a good ten million inhabitants. Iran’s never-ending dispute, the war in Yemen, and all the other latent conflicts make the region one of the world’s largest arms markets. The Abu Dhabi Arms Fair has long been one of the most important gatherings in the industry. And the UAE doesn’t just want to buy and trade, they also want to sell.
“The UAE is very interested in acquiring military technology and producing it themselves,” says Eckart Woertz, director of the Giga Institute for Middle Eastern Studies. “For this they have bought foreign know-how over the years.” As in Saudi Arabia, the development of an arms industry aims to make the national economy more independent from the ups and downs in the oil markets, while at the same time strengthening the influence of the military itself.
Missiles, drones, artificial intelligence technologies – these are all part of the Edge product range. The ruling family has installed a very illustrious director of the Arab world as the leader of the group: Faisal Al Bannai. The now 47-year-old became famous as a head of Axiom Telecom. The start-up, which Al Bannai founded in 1997 together with three friends and £ 50,000 of seed capital, is today one of the leading telecommunications trading houses in the region with sales in the billions.
In 2015, Al Bannai switched industries and founded a cybersecurity company called Dark Matter in Abu Dhabi. Dark Matter soon caused a stir in the security industry – when it lured former CIA and National Security Agency employees to the Gulf with large-scale lucrative offers. NGOs suspected that Dark Matter was involved in government surveillance and hacker attacks against members of the opposition. Al Bannai, the son of a former police general, denied the illegal activities, but admitted in a 2018 interview that 80 percent of Dark Matter’s orders came from government institutions. According to experts, the company plays a central role in government surveillance in the United Arab Emirates.
Al Bannai has been Edge’s boss for about a year. At first, he announced that he wanted to form an arms company of the new type outside the conglomerate. Hybrid warfare, that is, the combination of innovations from the arms industry and the civilian business world, is the future. Edge announced the first major order after just two weeks. A billion dollar missile for the UAE military, of course. And in February, the group introduced the first military drone made in the United Arab Emirates.
If nothing comes up, the Arabs will soon sell their assault rifles to the Bundeswehr. That has never happened before. It would be a triumph for Faisal Al Bannai, and the ruling house of Abu Dhabi.
But something can still come up. Heckler & Koch has announced that it will exhaust all legal procedures, which in effect amounts to a complaint to the public procurement court. In this case, the ministry already fears that the relevant contracts for the new ordered weapon of the Bundeswehr can no longer be concluded during this legislative period. In Suhl and Abu Dhabi they have to be patient with the party.
