By Claire Ferris-Lay
Players from Russia, China to seize gap in the market as West bans military deals
The value of arms exports to the Middle East and North Africa is set to increase in the fourth quarter as countries look to replenish military equipment used during the Arab Spring.
Russian, Indian and Chinese military providers are expected to seize a gap in the market left after countries including the US and UK revoked export licenses for equipment they fear could be used to quash civil unrest.
“We’re going into the fourth quarter and we’ve got more events that are going to happen - or there are going to be more requirements – so some of these militaries are going to have to replenish themselves,” said Theodore Karasik, a Middle East security expert at Dubai-based Inegma.
“You already having the UAE ordering new stuff to replace what they used in Libya, for example, [so] I think the numbers will increase,” he added.
The US, France and the UK have withdrawn dozens of licenses for arms exports amid fears they were being used during anti-government demonstrations. At least 30 people were killed during protests in Bahrain, home to the US Navy’s Fifth Fleet.
In June, the US put Bahrain on its list of human-rights violators.
“We will not issue licenses where we judge there is a clear risk that the proposed export might provoke or prolong regional or internal conflicts, or which might be used to facilitate internal repression,” UK Foreign Office Minister Alistair Burt said in February.
Russia’s Rosoboronexport on Sunday inked its first deal with Bahrain to sell its weapons to the Gulf state. The state-run arms trader, which is selling AK103 Kalashnikovs as well as ammunition, said it was looking to grow its business in Bahrain.
“The relationship between Russia and Bahrain has been increasingly getting stronger,” Abdul-Aziz bin Mubarak Al Khalifa, a Bahraini government spokesman, told Bloomberg.
“We are looking to cooperate with Russia in trade and technical services. One of the fields is in the area of light arms.”
Russia, who expects to export arms worth around $9bn this year, is also a major arms supplier to Syria. Rosoboronexport on Wednesday said it would continue to supply Syria with weapons deliveries because the United Nations had failed to impose sanctions against President Bashar al-Assad’s regime.
“There are no sanctions and we have received no such government instructions, so we are obliged to fulfill our contracts,” said Anatoly Isaikin, Rosoboronexport director.
Increasing pressure to revoke licenses for export could see renewed interest from military firms in Russia, India and China, said Karasik. “The big boys - Russia, India and China would all like to enter the market more so this is giving them the chance,” he said.
The mix of weapons is also likely to change, he added. “It’s prudent on their part - these GCC states - to do this purchasing or go for other types of packages that they may not normally go for that were popular in 2010,” he said.
“What they were getting last year, they still need it, but there are additional products that they also require for what will be occurring in the fourth quarter of this year and the first quarter of next year - if these materials can be delivered on time,” he added.
Despite a UK government crackdown on the export of arms to the Middle East and North Africa amid the unrest, British arms exports to the region increased by almost 30 percent between February and June to £30.5m ($50m) up from £22.2m during the same period the previous year, the UK Times said on Monday.
The majority of the business was in Saudi Arabia and the UAE, said the newspaper. Britain exported more than £60,000 of weapons to Libya in February.
A UK parliamentary report found that Britain had exported military exported military equipment to 15 regimes in North Africa and the Middle East since 2009 that could be used to repress civilians.
The UK is the world’s second largest exporter of defense products behind the US.For all the latest industry news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.