Volkswagen’s talks with Israeli arms maker Rafael about using the automaker’s Osnabrück plant in Germany are being complicated by concerns raised by Qatar’s sovereign wealth fund, the Qatar Investment Authority (QIA), Reuters reported.

Reuters said three people familiar with the matter described how Qatar—Volkswagen’s third-largest investor, holding 17% of voting rights through the QIA—has raised issues about the Rafael talks, citing Qatar’s complicated relationship with Israel. The obstacle could delay one of Volkswagen’s key projects in its turnaround plan, including efforts to find new uses for idling plants amid weak demand in Europe’s auto sector.

Volkswagen, its supervisory board, and the QIA declined to comment, Reuters said.

The report also noted that Rafael is interested in manufacturing components connected to Israel’s Iron Dome missile defense system at the Osnabrück site. Rafael previously signed a letter of intent to buy the plant, according to sources cited by Reuters in late April.

Qatar has no formal diplomatic relations with Israel and has positioned itself as a mediator between Israel and Hamas, which has a political office in Doha. Reuters said widespread public support in Qatar for the Palestinian cause and Doha’s stated conditions for normalization with Israel also factor into the sensitivity of any arrangement that would route Israeli defense manufacturing through a company Qatar partly invests in.

Finally, Reuters said Qatar has two seats on Volkswagen’s supervisory board, and that Lower Saxony—home to the Osnabrück plant and Volkswagen’s headquarters—could potentially be brought in via a joint venture with Rafael as a path to a solution, though no agreement was reported.