Gulf State Expands Strategic Partnership With Europe’s Largest Economy Across AI, Energy, Digital Infrastructure and Defence
The United Arab Emirates plans to invest €40 billion in Germany, marking a major expansion of economic ties between the Gulf state and Europe’s largest economy.
The investment package was announced during UAE President Sheikh Mohamed bin Zayed Al Nahyan’s state visit to Germany, where he met German Chancellor Friedrich Merz. The two sides described the partnership as increasingly important amid geopolitical and economic uncertainty.
The new investment comes on top of approximately €34 billion in existing UAE investments in Germany, underlining Abu Dhabi’s growing role as a major investor in the German economy.
AI, Digital Infrastructure and Energy
The €40 billion package is expected to support strategic sectors including industry, advanced technology, artificial intelligence, digital infrastructure and energy.
A major component will be the development of new advanced data centres with an anticipated combined capacity of approximately 1 gigawatt, reflecting the growing importance of digital infrastructure and artificial intelligence to Germany’s future economic competitiveness.
The UAE also plans to allocate €10 billion of the package to investments in Bavaria, strengthening its presence in one of Germany’s most important industrial and technology hubs.
Energy cooperation is another central pillar, with both countries seeking deeper collaboration across LNG, renewable energy and hydrogen as they work to strengthen energy security and supply resilience.
Defence and Strategic Cooperation
The partnership extends beyond business and investment.
Germany and the UAE agreed to deepen cooperation in defence and defence technology, including a letter of intent exploring expanded defence cooperation and a high-level defence roundtable.
The two governments also agreed to strengthen police and security cooperation, reflecting a broader effort to develop their relationship beyond a traditional commercial partnership.
€9.3 Billion in Business Agreements
The investment announcement came alongside a wider series of commercial agreements between UAE and German companies.
A total of 29 business-to-business agreements and memoranda of understanding worth more than €9.356 billion were signed during the state visit.
The agreements involve major areas of cooperation and companies including Covestro, RWE, ADNOC and Masdar, adding to an already substantial investment relationship.
Among existing investments, UAE-based XRG has invested approximately €15 billion in German chemicals company Covestro.
A Broader Long-Term Partnership
The two countries also announced the creation of a Strategic Dialogue and plans for a German-UAE Investment Council designed to strengthen cooperation between governments and the private sector.
Bilateral non-oil trade reached approximately $15.5 billion in 2025, an increase of more than 14% from the previous year, while cumulative investment flows between the two countries exceeded $10 billion between 2021 and 2025.
The UAE and Germany are also working toward closer EU-UAE trade relations, including negotiations on a potential comprehensive economic partnership agreement.
Strengthening Europe’s Economic and Energy Position
The announcement comes as Germany seeks to strengthen its industrial base, diversify energy and defence partnerships and reduce vulnerabilities linked to geopolitical tensions and global supply chains.
For the UAE, Germany offers access to advanced industrial capabilities, research, technology and one of Europe’s largest consumer and manufacturing markets.
The €40 billion investment package therefore represents more than a financial commitment. It signals an effort by Abu Dhabi and Berlin to build a deeper long-term partnership spanning technology, industry, energy, defence and strategic infrastructure.
