Indian Defence Review

Despite the complicated history of the Boxer contract, with the UK initially withdrawing and then returning to it, the partnership with Germany holds various advantages for Boxer production. However, it also entails risks, including export and corruption risks, given Germany’s history with Qatar, and ambiguous position regarding exports to other Gulf States, notably Saudi Arabia.   

The UK benefits from German expertise  

In 2022, after a long period of wrangling and negotiation, the United Kingdom finally secured a long-awaited contract extension with ARTEC, a German consortium including Rheinmetall and Krauss-Maffei Wegmann (KMW), for the supply of an additional 100 Boxer 8×8-wheeled armoured vehicles for the British Army via OCCAR, the intergovernmental Organisation for Joint Armament Cooperation. It is useful to recall that this extension comes for equipment that the UK hesitated on for a long time, even excluding it from its choices for several years. No doubt that if a more economical choice had been made 10 years ago, like AMV’s Patria or equivalent proposals, the army would have saved time, and the British taxpayer would have saved a lot of money. 

The contract is an extension of the OCCAR BOXER UK Contract amendment signed in 2019, in which the German consortium contracted KMW subsidiary WFEL and Rheinmetall BAE Systems Land (RBSL) as the UK footprint for the creation of UK production facilities, meaning the majority of these models are to be produced on British soil. The first 117 vehicles are being built on German production lines, the UK facilities in Telford and Stockport are in the process of optimising their manufacturing capabilities for the remaining 506. “The Boxer platform sets an unprecedented standard for armoured vehicles. From its ground-breaking power to weight ratio and mobility to its cutting-edge threat detection technology, Boxer will be a step change for manoeuvre for the British Army,” according to the Ministry of Defence. “The UK and Germany have worked closely together on the programme, with the vehicle built in the UK benefitting from German expertise, data and collaboration.”  

On paper, this is a joint venture that suits all parties. The British Army considers the Boxer MIV to be a core part of its abilities to run military campaigns on land alongside the Ajax and Challenger 3, and it will play a major role in the modernisation of the British Army as the world continues to struggle with geopolitical instability, notably following Russia’s invasion of Ukraine. For Germany, it is a chance to expand its commercial activities in a post-Brexit British economy and gain a foothold in an expanding British supply chain. 

In spite of these indisputable advantages, the United Kingdom ought to exercise some prudence in light of Germany’s sometimes obscure recent engagements in arms exports. The UK has every reason to be wary of Germany, whether in terms of its, at times, contradictory positions on export approvals for certain types of equipment, vis-à-vis Turkey and Saudi Arabia for example, or its ambiguous relationship with cases of corporate corruption. In this respect, what happened regarding Qatar will have to be closely monitored, given that the Boxer is reportedly still in the running for a contract there. 

Qatari affairs  

While Germany may not explicitly object to the export of Boxers to countries with whom it has sensitive diplomatic relations, lingering uncertainties persist regarding the terms for securing specific contracts. Notably, German regulations appear to be more lenient compared to the British justice system, as outlined in the Bribery Act (2010). Consequently, some German companies’ business dealings with certain countries have raised eyebrows, such as the case involving Hensoldt AG and its dealings with Saudi Arabia via subsidiaries in South Africa and the UK, or, notably, commercial relations with Qatar at a time when the conflict in Gaza is complicating bilateral relations between the two countries (Germany is a staunch supporter of Israel, while Doha is currently hosting the Hamas leadership).  

One recent example involves Krauss-Maffei Wegmann, a firm deeply involved in the Boxer affair. It has been alleged that the firm paid around 100 million euros to secure the order for 62 Leopard tanks, 24 howitzers, and other heavy equipment from Qatar. The commission, amounting to five per cent of the total volume, went to a company with powerful backers: Kingdom Projects, based in Doha. One of the shareholders of Kingdom Projects is said to be Sheikh Ahmed Nasser al-Thani, a brigadier general and deputy chief of the Qatari military intelligence. 

Shady payments to Kingdom Projects, an apparent shell company, are alleged to have amounted to a total of €28 million, according to a decision by the Swiss Canton Court in Zug. The affair raises a serious question: did KMW bribe a Qatari General? When the KMW consortium sought to market its Leopard 2 to Qatar, its French rival Nexter countered with second-hand AMX Leclerc tanks. The French firm aimed to woo the Qatari delegation with national honours. In contrast, the Germans eschewed medals, instead offering commission payments. KMW ultimately clinched the contract, sparking current deliberations on potential motives within the confines of the Zug courtroom. KMW denies allegations of bribery. 

Germany, a reliable partner?  

Germany’s geopolitical flip-flopping since Chancellor Scholz’s famous Zeitenwende speech has been frustrating for its allies. The UK in particular has been pushing for Germany to stop blocking the export of Eurofighter jets to Saudi Arabia, following BAE Systems 2018 deal to supply the Gulf state with 48 jets. A third of the components come from Germany. The UK is eager to continue arming Saudi Arabia in the face on the growing threat from the Iranian-backed Houthi rebels in Yemen, who have been causing havoc in the Red Sea since Israel’s invasion of Gaza. “We do not see the German government opposing British considerations for more Eurofighters for Saudi Arabia,” exclaimed German Foreign Minister, AnnalenaBaerbock to reporters on a trip to Israel. 

Indeed, Germany has a history of abandoning its partners during collaborative commercial campaigns. Following the murder of Jamal Khashoggi, for example, Angela Merkel’s government suspended all arms exports to Saudi Arabia unilaterally following increasing pressure from NGOs. Germany subsequently used the framework of this suspension to block French arms exports to the Gulf state involving any vehicle that contained German-made components. French firms Nexter and Arquus urged authorities to find a solution, as German reticence was holding back a number of deals. A deal was eventually struck and a German court eventually annulled the suspension.  

Indeed, German restrictions on arms exports could be detrimental to the Boxer contract. It is possible that the deal with RBSL does not include a clause allowing the UK to export the Boxer, and this could consequently cause issues for Ministry of Defence, because the Boxer contract with Qatar is not the only one involved: the UK MOD is also partnering Germany on another contract in the framework of the “Wide Wet Gap Crossing” defence procurement project, in which the British government has already invested over £1.5 million. The United Kingdom wouldn’t have had to worry in this way if, instead of the Boxer, it had chosen AMV’s Patria with its industrial license export model, as Poland did as early as 2013. 

German firms, for their part, are managing to circumvent legal restrictions on arms exports by shifting manufacturing bases abroad. Rheinmetall, for example, planned to build a tank production facility in Turkey (a project it eventually pulled out of) in order to bypass the longwinded political debate regarding arms exports in Germany and facilitate the export process by avoiding domestic red tape. The German firm already runs a production plant in Hungary that produces the Lynx fighting vehicle, and even hosted a Qatari delegation in the autumn of last year in a meeting that included discussions on potential collaboration. The UK should remain wary that such meetings do not jeopardise the Boxer deal. 

Indeed, RBSL and ARTEC will be hoping for similar regulatory comfort once the Boxer production line is open in the UK…