Saudi and UAE driving GCC defence
The two military heavyweights of the Gulf Cooperation Council (GCC), Saudi Arabia and the UAE, are driving defence procurement in the region with recent increases due in part to operations against Houthi forces in Yemen.
With an estimated spend of $87.2 billion, Saudi Arabia had the highest military expenditure in the GCC in 2015. In fact, having doubled its spending since 2006, the country rose to third in the rankings of the biggest spenders globally, according to the SIPRI Arms Transfers Database 2015. Though it did have the third largest defence budget for last year – $81.9 billion – recorded figures show that total actual government expenditure has exceeded each annual budget since 2010.
The $5.3 billion military overspend was approximately 17% of the total excess in 2015 and is due largely to Saudi military intervention in Yemen. As operations in Yemen continue in 2016, Saudi Arabia is looking to boost its fleet of M1A2S main battle tanks (MBTs), and replace at least 20 destroyed in combat.
By 2014 the UAE had also increased its military expenditure with 136% growth since 2006. This upward trend in expenditure across the GCC is reflected in international trade. SIPRI stated that arms imports to GCC states ‘increased by 71% from 2005-2009 to 2010-2014’, accounting for 54% of imports to the Middle East in the latter period.
The largest GCC importers, Saudi Arabia and the UAE, were among the largest globally in 2015; Saudi Arabia became the second largest importer of major weapons worldwide in 2010-2015. According to the IHS Global Defence Trade Report 2016, the two countries imported defence systems worth $11.4 billion (17.5% of the global total), an increase of $2.8 billion from 2014.
However, US ITAR restrictions have meant that the UAE has recently focused on indigenous production of military equipment, particularly the domestic development of unmanned technology. Trade with China has also benefited from the US reluctance to approve export sales of armed unmanned aerial systems; CASC CH-4B platforms have been delivered to the UAE and to Saudi Arabia for use in Yemen.
An additional area of focus for member states of the GCC appears to be upgrades to naval forces. The Royal Navy of Oman (RNO) has recently completed one of the most comprehensive fleet rejuvenation programmes in the GCC region. The US State Department has also approved a possible foreign military sale (FMS) to Qatar worth over $124 million for an undisclosed number of Mk V fast patrol boats.
While it seems that military expenditure is increasing in the GCC and the region is a strong presence for international defence trade, the reliance of Arab states on the oil sector means that fluctuation in oil prices impacts government spending trends. Since oil exporting states account for the majority of regional GDP, IISS Military Balance reported that defence spending as a proportion of GDP rose from 4.7% to 5.8% in the Middle East in 2014, reflective of high oil prices in Saudi Arabia, Qatar and the UAE.
However, when oil prices began to fall in late 2014 oil-revenue dependent countries, including Oman, saw a reduction in military spending. This didn’t appear to have an immediate impact on Saudi Arabia, though SIPRI predicted that the figures for 2016 will indeed show a corresponding decrease in military expenditure.
That said, Saudi Arabia and Kuwait are part of OPEC, who have recently announced a cut in oil production to boost prices. The cuts—including 4.6% promised by Saudi Arabia—will take effect in January 2017 and will last for six months. A positive correlation might therefore be expected between the rise in oil prices and defence expenditure for 2017.
A further caution to this report of increasing growth in the GCC defence market is the low regional transparency over defence budgets and spending. In its datasheets, SIPRI gives estimates for some states (notably the UAE) rather than actual disclosed values. Other states, including Kuwait and Qatar, have had data omitted for the last two years.
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