Qatar’s sovereign wealth fund is delaying the joint plans of Volkswagen and Israeli government owned arms producer Rafael Advanced Development System to manufacture transporters for the Iron Dome missile defense system, "Reuters" reports. The Iron Dome components will be produced, according to the plan, in Volkswagen’s ailing plant in Osnabruck in Lower Saxony, which currently produces Cabriolet cars and is scheduled to be closed as part of Volkswagen’s streamlining plan.

Qatar has a major say in the deal because it owns a 17% stake in Volkswagen and is the carmaker’s third biggest shareholder. Qatar has expressed concern over the deal due to its complicated relationship with Israel.

The Qatari delay poses major problems for the implementation of Volkswagen’s future strategy, which aims to offload loss-making plants by switching to defense industries that are in increasing demand. This is why Volkswagen and Rafael signed a memorandum of understanding in April for the production of components for the Israeli Iron Dome air defense system in Germany. In this way, the Israeli company wants to expand production capabilities, streamline supply chains, and deepen its foothold in Europe.

Lower Saxony minister-president Olaf Lies, who is a member of the Volkswagen supervisory, declined to comment directly to "Reuters" on the Qatar issue, urging Volkswagen to find a long-term solution for the Osnabruck plant, which has 2,300 employees.

"I expect the company to live up to this responsibility and present the announced decisions in a timely manner. The state will provide constructive support wherever it is appropriate and possible," he told Reuters.

He said these things with the understanding that, due to Qatar's pan-Arab and pan-Islamic image, it would be difficult for Doha to allow such a deal.

Published by Globes, Israel business news - en.globes.co.il - on June 22, 2026.

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