GCC defence spending seen rising 20% by 2015

  • Share via facebook
  • Tweet this
  • Bookmark and Share
MILITARY DEALS: The Gulf region is increasingly being targeted by global defence manufacturers. (Getty Images)

MILITARY DEALS: The Gulf region is increasingly being targeted by global defence manufacturers. (Getty Images)

The world’s biggest defence manufacturers are increasingly seeing the Gulf as an increasingly vital destination for their products, given the cutback in national budgets as a result of the recession.

Data provided to Arabian Business by the US-based Forecast International consultancy predict that Gulf governments are predicted to spend $83bn on the defence sector in 2015, up from an estimated $68.3bn this year.

But Forecast International experts also said that the figures erred on the conservative side, particular where Saudi Arabia is concerned.

“Saudi Arabia puts around 30 percent of its regular state budget into defence – so that’s around a third,” said Forecast International Europe and Middle East military markets analyst Dan Darling.

“And we estimate it low – some agencies put that figure at 35 to 40 percent. Our estimates put it at around 29-31 percent, so we’re lowballing, effectively.”

The Middle Eastern region as a whole was the recipient of 17 percent of international transfers of conventional weapons over the course of the last five years.

Data from the Stockholm International Peace Research Institute (SIPRI) says that 33 percent of all arms transfers to the region went to the UAE, which was also the fourth-largest importer of arms worldwide during the 2005-2009 period.

Sources close to the defence sector also told Arabian Business that it was likely the UAE will confirm a deal with France to upgrade its air force to the new Rafale jet fighter during the Farnborough Air Show later this month. The deal could be worth as $7bn.

The boom in spending means that the Gulf region is a magnet for the major defence suppliers, especially as austerity measures in some markets due to the economic downturn mean that national security budgets are slashed or frozen.

“There are two reasons why global suppliers place a premium on this [the GCC] market. Firstly, because there are only so many regions that are still buying,” Darling added.

“Secondly, what they’re buying is very expensive. We’re looking at whole platforms, so jet fighters, and air defence missile systems, and effectively any aviation from helicopters to transport helicopters to tactical and strategic airlift. It’s still a robust market, despite the recession.”

As well as US giants such as Boeing, Lockheed Martin and Raytheon, British and French companies are also extremely active in the Gulf marketplace.

“Countries that are highly dependent on oil and gas prices – certainly Saudi Arabia, Qatar and UAE – currently have so much money that they can buy anything that they perceive they require,” said Brinley Salzmann, exports director at ADS, the trade organisation that represents British firms in the aerospace, defence and security industries.

“Even those countries that aren’t awash with gas and oil-related income – like Bahrain and Oman – still have the money to buy the equipment that they need.

The defence industry is one that has been earmarked by British prime minister David Cameron as one that the new coalition government in the UK will be trying to develop further in the coming years. Cameron visited the UAE during his first visit abroad since becoming prime minister in May, and the Queen is set to visit the country next year.

“That’s obviously a very welcome development. Given that the competition is often between countries just as much as companies – the support at that high level is extremely important,” Salzmann added.

Related:
Join the Discussion

Disclaimer:The view expressed here by our readers are not necessarily shared by Arabian Business, its employees, sponsors or its advertisers.

Please post responsibly. Commenter Rules

  • No comments yet, be the first!

Enter the words above: Enter the numbers you hear:

All comments are subject to approval before appearing

Further reading

Features & Analysis
UAE's role in the new space race

UAE's role in the new space race

In the last five years, the UAE has invested heavily in a bid...

The gentleman’s lounge

The gentleman’s lounge

The new GQ bar delivers a true sense of masculinity with its...

Are you fit enough to run a business?

Are you fit enough to run a business?

We look at what the consequences are of being unfit or overweight...

Most Discussed
  • 54
    Three UAE women attacked with hammer at London hotel

    I really feel that Arabian Business.Com should now close this comments page. This should be all about sympathy for the families not what it is/has turned... more

    Wednesday, 16 April 2014 1:06 PM - Adrienne
  • 51
    Why Dubai isn't a plastic city

    What is definitely not a plastic city. The Arabs have a culture dating back to several centuries. 50 years back Dubai was just a fishing village. Today... more

    Tuesday, 8 April 2014 3:49 PM - P. MADHUSUDAN
  • 48
    DMCC boss Ahmed Bin Sulayem entertains Robert Mugabe in Dubai

    @fga ''However today, simply because he decided to dispossess a few white farmers of their land and redistribute to the poorer indigenous blacks'' more

    Sunday, 13 April 2014 3:02 PM - Matt Williams