Heckler & Koch, which has manufactured the German military's standard assault rifle lost the contract for the first time in 60 years.
Anti-arms activists are concerned.
Jürgen Grässlin told DW the decision was a "complete catastrophe from a human rights point-of-view".
"We thought that the German government wouldn't approve the deal if the contract went to a company where the owner is not only not in Europe, but in the United Arab Emirates," he said.
"The UAE isn't a normal country by our criteria: It's in a crisis zone, and for years it has been involved in the Yemen war alongside Saudi Arabia."
The UAE's recent decision to normalise relations with Israel has put a strain on regional dynamics, with many countries criticising the move.
The Palestinian Authority oppose normalisation, even as Bahrain follows suit.
Despite the peace deal, the UAE's recent bid to purschase F-35 fighter jets from the US has been opposed by Israel.
— The New Arab (@The_NewArab) September 16, 2020" style="color:#fff;" class="twitter-post-link" target="_blank">Twitter Post
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