The United Arab Emirates announced about $1.35 billion in defense deals with local and international firms on the opening day of IDEX 2019, the International Defence Exhibition and Conference, in Abu Dhabi on Sunday. Global companies like Raytheon, Lockheed Martin and Hesco, the contracts will provide missiles, new radar systems competences and defensive shelters for the UAE military, respectively. Others achieving sales to the country involved France’s Thales, Australian firm EOS Defense and Germany’s Rheinmetall Electronics. The deals with 18 domestic firms highlight the small Gulf country’s investment in improving its own defense manufacturing industry as part of a drive to spread its economy away from oil.
The acquisitions come at a time when defense spending is rising in the Middle East. A report from IHS Jane’s issued Friday revealed an upsurge in arms expenditures in the Gulf from $82.3 billion in 2013 to $103 billion in 2019. And it’s showing no signs of ending — IHS forecast expenditure will hit $110.8 billion in 2023. While the drop in oil prices from 2014 to 2016 deferred many procurement projects, “defense was generally protected from the worst of the spending cuts owing to the regional security worries and budgets are now growing again,” Charles Forrester, senior defense industry analyst IHS Jane’s, wrote in the report.
The heavy spending is no surprise given the ramp-up in political pressures over the last few years between local rivals Saudi Arabia — along with its Gulf partners the UAE and Bahrain, among others — and Iran. The Saudi-led barrier against Qatar has also spiked arms procurement, as the latter’s causing re-armament made it the world’s eighth-largest weapons importer in 2018, IHS said. The Middle East is the world’s top arms-importing region, according to the analytics firm, accounting for nearly 20%t of the global defense market. American companies make up 50% of the exports that go there.
Ian Bremmer, founder of political risk consultancy Eurasia Group, says it’s nothing short of a local arms race. “I think there is an arms race taking place in the Middle East,” Bremmer told CNBC at the Munich Security Conference on Sunday. “The Saudis of course are spending the most on their defense, but the UAE is ramping up as well, the Iranians are ramping up.” With a slowdown in growth forecast for the entire Middle East and North Africa region, thanks in part to lower oil prices, that expenditure will come under pressure. The UAE is a top regional supporter to the U.S. in the fight against terrorist organizations, and has been credited by Pentagon officials for its role in battling Al Qaeda in Yemen. More recently, however, it has come under increased criticism for its role in Yemen’s civil war, where a Saudi and UAE-led offensive coalition has been described by the UN as being responsible for most of the at least 10,000 civilian deaths in the country since 2015.
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