By Yara Bayoumy and John Irish
UNITED NATIONS (Reuters) - Germany and Saudi Arabia agreed on Tuesday to enter a new phase in relations after a diplomatic dispute that had soured ties between the two countries.
The spat began in November when Germany's foreign minister at the time, Sigmar Gabriel, condemned "adventurism" in the Middle East, comments that were perceived by some as an attack on increasingly assertive Saudi policies. Arab forces, led Saudi Arabia and the United Arab Emirates, are fighting Iran-aligned Houthis in Yemen's war.
Riyadh dismissed the Gabriel's comments as "shameful" and withdrew its ambassador to Germany. German exports to Saudi Arabia fell 5 percent in the first half of 2018.
German Chancellor Angela Merkel has been trying to ease tensions, speaking to Saudi Crown Prince Mohammed bin Salman by telephone.
"In recent months, our relations have witnessed a misunderstanding which stand in sharp contrast to our otherwise strong and strategic ties with the Kingdom of Saudi Arabia and we sincerely regret this," German Foreign Minister Heiko Maas said alongside his Saudi counterpart, Adel al-Jubeir, at the United Nations, where leaders are gathered for the annual General Assembly.
"We should have been clearer in our communication and engagement in order to avoid such misunderstandings between Germany and the kingdom," he said.
Jubeir said he welcomed Maas' statement and invited him to the kingdom to intensify their ties.
Earlier this month, Germany approved a delivery of weapons to Saudi Arabia, a government document showed, after saying it would halt arms sales to countries involved in the war in Yemen.
Last month, European and U.S. pharmaceutical associations waded into the diplomatic dispute, warning that restrictions on German-made drugs could hurt Saudi patients and dampen future investment in the kingdom.
"We'll do our best to make this partnership with the Kingdom even stronger than before," Maas said.
The dispute was reminiscent of one that erupted between Canada and Saudi Arabia, which was triggered by a post on twitter by the Canadian foreign minister calling for the release of human rights activists in Saudi Arabia.
The kingdom responded by expelling the Canadian ambassador, recalling its own envoy, freezing new trade and investment, suspending flights and ordering Saudi students to leave Canada.
(Reporting by John Irish and Yara Bayoumy; Editing by James Dalgleish and Grant McCool)