Schmidt Hopes Favorable Economic Deal from Saudis Will Defuse Parliamentary Opposition to Germany’s

— Chancellor Helmut Schmidt, scheduled to visit Saudi Arabia April 27, hopes to return with offers of an economic package deal so beneficial to West Germany’s economy and industrialists that strong Bundestag opposition to projected arms sales to the Saudis will be defused. The deal Schmidt is said to have in mind includes Saudi guarantees of an uninterrupted oil supply to West Germany under preferential conditions.

Bonn, for its part, would be committed to sell Saudi Arabia thousands of sophisticated armored vehicles, the newest German tank, the Leopold II and possibly Tornado combat planes, built by a German-Italian-British consortium. But the economic benefits would be of such proportions as to make the arms deal appear as only a minor element of the package.

BASIS FOR SCHMIDT’S STRATEGY

Schmidt is following this strategy, according to some observers, in order to overcome the strong political opposition to the arms sales within his own Social Democratic Party(SPD) and its coalition junior partner, the Free Democrats (FDP).

The latter, headed by Foreign Minister Hans-Dietrich Genscher, held a congress recently marked by a fierce battle of words between supporters and opponents of arms sales to Saudi Arabia. In a subsequent vote, opponents of the deal failed to win a majority for a motion aimed at tightening West Germany’s self-imposed limitations on arms sales to non-members of the North Atlantic Treaty Alliance located in “areas of tension” such as the Middle East.

The economic package Schmidt is pressing for also includes a dramatic increase in West Germany’s 500 million Mark investment in Saudi Arabia’s modernization program and additional long term credits to Bonn to cover a widening gap in its national budget. Bonn would reciprocate in the political field by tightening its relations with Riyadh and agreeing to consult with the Saudi government on any future German steps in the Middle East.

Government spokesmen have stressed that Schmidt will not be in a position to give the Saudis binding assurances at this time. But he is said to be undertaking the trip not to make final decisions but to prepare public opinion for the package deal and all of its ramifications. He appears to have support in top business circles.

The West German Association of Industrialists has just warned the government that failure to respond positively to Saudi Arabia’s arms purchase requests would have grave consequences for German firms operating in the Middle East and adversely affect the prospects of attracting civilian orders worth billions of dollars. A delegation of German industrialists that recently visited Saudi Arabia reported that the Saudis closely link future arms sales to a wide range of commercial and economic relationships with the Federal Republic.