BERLIN (Reuters) - The Social Democrats, junior partners in Germany's ruling coalition, want to extend a freeze on arms exports to Saudi Arabia beyond March 9, despite pressure by Britain and France not to do so and a risk of costly compensation claims.
Rolf Muetzenich, SPD deputy leader in parliament, said his party would fight to maintain the halt in shipments of already approved weapons deals with Riyadh that Berlin imposed in November over the killing of Saudi journalist Jamal Khashoggi.
"We will push to continue the halt in arms exports to Saudi Arabia beyond the March 9 deadline, since the reasons for the imposition of the moratorium have not changed," Muetzenich wrote in an essay published on Monday in the SPD newspaper Vorwaerts.
The SPD and Chancellor Angela Merkel's conservatives agreed in November to reject licences for future arms exports to Saudi Arabia, a major buyer, and set a temporary moratorium on deliveries of previously approved kit that lasts till March 9.
Last week, Merkel declined to say whether the freeze would be extended.
Britain and France have urged Germany to exempt big defence projects from its moratorium on arms sales to Saudi Arabia or face damage to its commercial credibility.
Airbus CEO Tom Enders, whose company builds components for aircraft and missiles affected by the arms freeze, said the SPD's stance would harm Germany above all.
"Mr. Muetzenich's and the SPD's view on foreign and security policy is totally inconsistent, torpedoes Franco-German defence cooperation and isolates Germany in Europe," he told Reuters.
Concerns about Saudi arms sales and a broader push to revamp arms export guidelines are dividing the coalition, with the left-leaning SPD keen to avoid further losses among German voters who are generally cautious on arms sales.
Norbert Roettgen, a senior foreign policy expert for the conservatives, said Germany would alienate its European partners if it continued to insist on maintaining the arms embargo.
"Europe cannot be built on the principle of 'Germany First,'" he said. "If we want a European defence union, that also includes European weapons projects for political, economic and military reasons. Exports cannot be decided solely according to German ideas."
Large European companies, including Airbus and Britain's BAE Systems have warned the issue could affect their financial performance.
Another senior conservative lawmaker told Reuters he saw no easy way to resolve the dispute, barring progress in ending the Yemen war, which meant Germany could soon be facing millions of euros in compensatory claims from affected companies.
As well as the killing of Khashoggi in the Saudi consulate in Istanbul, Riyadh's role in the Yemen war has also increased opposition in Germany to arms sales to Saudi Arabia. Riyadh leads a coalition battling the Iran-aligned Houthis in Yemen.
The German Economy Ministry said it continued to work with German firms to halt any arms exports to Saudi Arabia, but declined to comment on whether it had already received claims for damages. German media estimate the halt has affected some 1.5 billion euros (£1.3 billion) worth of arms sales.
(Reporting by Andrea Shalal; Editing by Gareth Jones)