A foreign policy dispute is escalating between Saudi Arabia and Germany, over Germany's criticisms of the kingdom's Middle East policies aimed at confronting allies of Iran in Yemen, Lebanon, and elsewhere.

Der Spiegel reports:

[T]he once-positive relationship between Saudi Arabia and Germany has worsened.  Six months ago, Riyadh withdrew its ambassador from Germany and he still hasn't returned. There has been little open discussion of the reasons behind the conflict[.] ...

Young crown prince Mohammed bin Salman, known as MBS for short, appears to be "deeply offended" by the German government, says Daues, who adds that his information comes from confidants in Riyadh.  Relations between the two countries began souring last November when then-German Foreign Minister Sigmar Gabriel spoke of spreading "political adventurism" in the Middle East, a remark many thought was aimed at Saudi Arabia.  The impression was widespread at the time that Lebanese Prime Minister Saad Hariri was being held against his will in Riyadh and that he was being strong-armed by the rulers there to step down. ...

Berlin is determined to stick with the nuclear deal despite U.S. President Donald Trump's announcement he will withdraw from it, whereas there is deep-seated distrust of the government in Tehran in Riyadh.  It may be that the Saudi crown prince views Germany's conduct as criticism of his governance.  Sources close to him say that a relaxed attitude toward differences of opinion is not one of the prince's strong points.

Whatever the fate of German contracts with Iran, Germany's exporters have a lot to lose in Saudi Arabia.  Reuters reports:

Siemens last year won an order worth around $400 million to deliver five gas turbines for a combined heat and power plant being built in Saudi Arabia.  Daimler soon after secured an order for 600 Mercedes‑Benz Citaro buses from Saudi bus operator SAPTCO.

A senior German businessman in Saudi Arabia, who asked to remain anonymous, told Reuters on Friday that especially the healthcare sector was currently feeling added scrutiny when applying for Saudi tenders.

"They have even been asking: Where are the products coming from?  Are they made in Germany?  Do you have other manufacturing sites?  And as soon as this is made in Germany, they have been rejecting any German applications for tender," the person said.

Germany is Saudi Arabia's top trade partner in the E.U. and has enjoyed an export surplus.  From Der Spiegel's account, it appears that Chancellor Merkel is attempting to de-escalate, but MBS is truly angered:

German Chancellor Angela Merkel has since had a telephone conversation with the crown prince in which she assured her personal regard for the prince and said she was looking forward to future cooperation with the kingdom.  Gabriel also stated repeatedly before leaving office in March that his remark about Middle East adventurism had not been specifically aimed at Riyadh.  Diplomatic notes have since been exchanged and meetings between ambassadors held.

But none of that has sufficed.  Sources inside the palace in Riyadh say they are expecting an "apology."  "The Saudis are a proud people and they are also very sensitive to criticism," says landscape architect Bieler, who has long been familiar with the country's culture.

Once again, as with the crime wave engendered by allowing in a million "refugees" (mostly military-age young Muslim males), German citizens and companies are learning that there can be a heavy cost to virtue-signaling.