Raytheon hopes to clinch Gulf defence deals before year-end

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(Photo for illustrative purposes only)

(Photo for illustrative purposes only)

Raytheon is hopeful of completing billions of dollars of defence deals with Gulf states before the end of the year, one of the company's senior executives told Arabian Business, as it seeks to offset the impact of upcoming military budget cuts in the US.

The third biggest provider of military equipment to the US government, whose revenues in its last fiscal year were $25bn, is currently in negotiations for major defence agreements in the UAE, Kuwait, Qatar, Saudi Arabia and Oman.

These negotiations include a previously reported $4.2m agreement for Kuwait to procure Raytheon's Patriot integrated missile defence system, a $1bn deal with Qatar for an early warning radar system, a $1.5bn contract with Oman for a missile defence system and multi-billion dollar deals with the UAE and Saudi for air-to-surface missiles.

"It's an ongoing serial and parallel process of completing discussions and making sure that we put the right proposals on the table," said John Harris, CEO of Raytheon's international division, which handles weapon sales outside of its domestic market.

Asked if he expected any deals to be completed this year, Harris responded: "Inshallah - that means in God's will. It's obviously a very dear purpose of ours to work as many programmes as we can, and obviously to the benefit of our customers."

Raytheon global chairman and CEO William Swanson was in Abu Dhabi on Thursday where he held talks with the emirate's Crown Prince Mohammed bin Zayed Al Nahyan, who is also deputy supreme commander of the UAE's armed forces.

Arabian Business understands that Raytheon will make an announcement regarding at least one of these deals at the Dubai Air Show, which begins on Sunday.

Harris said that Raytheon currently derives around a quarter of its revenue from international markets, of which the US-allied Gulf Arab states are a major contributor. The company is looking to increase the value of business it does outside of its home market amid military spending cutbacks in the US, known as sequestration, which are due to kick in from next year.

"[International markets] are an important part of our growth and future," Harris said. "Our overseas business is upwards of 27 percent and we intend to grow that."

Gulf states have been bumping up their military spending amid increased tensions with Iran, which has faced several rounds of sanctions from the EU and US over its disputed nuclear enrichment programme.

According to the latest Global Militarisation Index by the Bonn International Centre for Conversion (BICC), the Middle East is the most militarised region in the world, with all of its countries ranked among the top 40 and three of the six Gulf states in the top ten. Kuwait is considered the most militarised in the GCC, in seventh position globally, followed by Bahrain (9th) and Saudi Arabia (10th).

The high rankings were as a result of a dramatic increase in foreign weapon sales by the US to Gulf states, which tripled in 2011 to $66.3bn, as regional governments sought to build up their military supplies amid growing tensions with Iran.

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