America's weapons sales to the GCC are only going to continue

The US wants its Gulf allies to be able to fight their own battles with their own weapons.
Billion-dollar deal: The Trump administration has set forth a plan to arm their GCC allies.
By Tim Balconi
Wed 05 Jul 2017 11:54 AM

The United States continues to lead the world in weapons sales, thanks in part to a 43 percent increase in deals under the Obama administration. Nearly half of those went to the Middle East, according to a report by the Stockholm International Peace Institute.

This trend is expected to increase at a rapid rate during the Trump presidency as the White House pivots to their traditional Gulf Arab allies to deter Iranian influence, and defend against terror groups in the region.

If the recent agreement between the United States and Saudi Arabia — with $110bn of weapons sales set for immediate release and $350bn over ten years — is any indication, we will witness a massive enhancement of military capabilities throughout the GCC. Only time will tell what this mean for stability in the region, and what is the true economic cost for the Gulf.

National and economic security are often so closely aligned that it can be difficult to distinguish between the two. The free flow of oil has long been a critical component of US foreign policy, and the risk of any military confrontation or blockade in the Strait of Hormuz would have a severely negative effect on the world economy.

The United States is dealing with a population at home that is war fatigued — weary of any potential future conflicts because fighting in Afghanistan and Iraq has cost thousands of lives and billions of dollars.

As a result, the Trump administration has set forth a plan to arm their GCC allies and provide training to increase the capabilities of the respective militaries, thereby allowing the United States the ability to decrease their military involvement while also exporting multi-billion dollar weapons systems that will, in turn, secure American jobs. It will have a positive impact on the American economy and potentially play well in domestic political circles in Washington, while also providing opportunities for companies throughout the GCC to benefit.

These deals are typically managed through a FMS (Foreign Military Sales) programme under which the foreign government pays the US government for the programme while contracts are awarded and managed through the appropriate US government entity. The weapons and equipment are purchased through one of the large US defense companies (such as Lockheed Martin or Raytheon), and installation or implementation usually requires either new infrastructure to operate or construction upgrades to existing locations. Although some of these programmes may be closed, which means only a pre-approved American contractor can bid on the construction work, there are likely to be projects that will be open to local GCC companies to submit bids. There will also be opportunities for local companies to supply materials and equipment for construction related to these contracts. It could provide a substantial opportunity for many regional firms.

The United States has either drafted or is in the planning phase of other large programmes for GCC states to bolster their military resources and training. James Mattis, the US Secretary of Defense, said during a speech about the Middle East in April 2016: “In the future, just recognise that in order to restore deterrence, we’re going to have to show capability, capacity and resolve”.

This strategy has had a major influence on Trump’s foreign policy objectives. The military, political and economic alliance between the US and GCC is likely to grow only stronger over the coming years.

Tim Balconi, Managing Partner at Timarus Group.

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