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Berlin hails proposed Franco-German defense merger

As Europe's arms industry faces tumbling profits on slashed defense budgets, Germany's Kraus-Maffei and France's Nexter seek to create the Continent's largest arms manufacturer. Praise has come from Berlin and Paris.

The German government on Wednesday heralded the proposition of a Franco-German defense merger that would create Europe's largest weapons manufacturer, but warned that the newly fused firm would not be able to skirt export restrictions.

"Fundamentally, cooperation across Europe in the defense industry is a sensible project," a spokesman for the Economic Ministry said.

But he cautioned that the "German export controls remain in place."

The merger would create an entity with sales reaching nearly 2 billion euros ($2.7 billion) and a workforce of more than 6,000.

The deal was championed as a way for arms suppliers to save money at a time when their balance sheets are under pressure as EU governments allocate fewer tax euros for defense spending.

But as cautious laudations trickled out of the ministries in Berlin and Paris, Germany's Economic Minister Sigmar Gabriel has been outspoken about curbing arms exports to authoritarian states such as Saudi Arabia, a major buyer of German tanks.

Last month, Gabriel promised to adopt a more cautious approach when it came to approving arms shipments to countries with questionable track records on human rights.

Some conservatives responded that Gabriel's comments gave the impression that the defense industry was not important, adding that too many restrictions could jeopardize jobs as those companies move abroad.

cjc/uhe (Reuters, dpa)

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