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Middle East Weapons Fair, forecasters expect Gulf spending to fall by 10%

Crown Prince Mohammed bin Zayed bin Sultan al-Nahyan (C) of the United Arab Emirates Army Deputy Commander of the United Arab Emirates is examining a scale model of the T-14 Armata tank by UralVagonZavod Research and Development. I will. Corporation at IDEX 2021 International Defense Exhibition & Conference.

Photo by TASS | TASS via Getty Images

Dubai in the United Arab Emirates — defense spending across oil-rich Gulf countries — one of the world’s top US arms buyers — is expected to decline by nearly 10% in 2021 after a significant increase in the previous year It has been.

This is due to budget tightening due to falling oil prices during the coronavirus pandemic, Defense Intelligence Agency Jane said in a new report.

“Gulf Cooperation Council (GCC) countries’ defense spending will fall 9.4% in 2021 as countries in the region face pressure from the effects of Covid-19 and low oil prices,” Jane said. He wrote in a report released on Friday. “We expect a rapid recovery in the next few years,” he added, but will not return to pre-pandemic levels until 2024. According to Stockholm International Peace, this is a major change for regions where arms imports increased by 61% between 2015 and 2019. Laboratory.

“The sharp fall in oil prices in 2020 and the corresponding decline in demand from the manufacturing and transportation sectors has increased pressure on government budgets,” said Charles Forester, chief analyst at Janes. It was. He noted a decline in oil and gas revenues, as well as revenues from non-oil sectors such as tourism, finance and travel as a result of national blockades.

In 2018, the company predicted that Gulf Defense spending would increase consistently over the next few years, exceeding $ 110 billion by 2023. Defense spending in 2020 was $ 100 billion, up 5.4% year-on-year, but is projected to decline to $ 90.6 billion this year. It will be $ 89.4 billion in 2022.

The Gulf Cooperation Council said: Defense spending and GDP growth, 2010-2025. Source: IHS Markit / Janes Defense Budgets

IHS Markits / Janes

Procurement spending on defense equipment purchases, but not including salaries, operational and maintenance costs, R & D, etc., will also fall from $ 13.38 billion in 2021 to just $ 13.25 billion after a 4.5% surge in 2020. Is predicting.

The report was released ahead of IDEX, the largest defense expo in the Middle East this week in Abu Dhabi. Despite the pandemic, IDEX was still busy with participants. Prior to the event, the organizers will exhibit more than 70,000 participants and 900 exhibitors throughout the week to showcase the latest technology and brokerage transactions in regions that account for 35% of the world’s total arms imports over the last five years. Expected to gather in the capital of Emirati. According to SIPRI.

Israel is absent from weapons fair

After the signing of the Abraham agreement in September, Israel was absent from the arms trade fair, despite historic normalization and the rapid warming of relations with the UAE. There has been much talk of defense and technical cooperation since then, but due to the surge in Israel’s Covid-19 incident, national leadership has closed major airports and stopped traveling abroad.

The advent of diplomatic relations with Israel means new technology and more competition for the Gulf market, offering more options for equipment that is still compatible with those already purchased from the West.

Lockheed Martin F-35 Joint Strike Fighter Lightning II

Robert Sullivan | Flickr CC

One of the big question marks is the Lockheed Martin F-35 Joint Strike Fighter Jet, which the UAE made a $ 23 billion purchase on President Trump’s final day.

It will be the first Arab nation to have a sophisticated and secretive system that attracted attention in the aftermath of the agreement with Israel. The Israeli army is already flying jets. The acquisition of the United Arab Emirates “will help connect the defense industries of the United States, Israel and Emirati,” Jane’s report said.

Development of the local defense industry

However, the sale is currently pending review by the Joe Biden administration. The Joe Biden administration has so far restrained relations with the Gulf countries compared to its predecessor, who bypassed Parliament to promote large-scale arms trade with the United Arab Emirates and Saudi Arabia. I will. Other.

This is because the UAE and other Gulf countries, Saudi Arabia, have invested in the development of their own defense industry with the aim of increasing self-sufficiency, increasing local employment and competing for their own rights as an arms exporter. It is considered one of many reasons for being there. ..

With the help of state-owned enterprises such as the Saudi Arabian military industry and Emiratis’s EDGE, Saudi Arabia and the United Arab Emirates are also working to leverage new technologies in the defense sector to build their own traditional deterrence capabilities. To reduce reliance on foreign suppliers. “

These technologies include unmanned systems such as armored vehicles, naval vessels, smart missiles, electronic warfare capabilities, and aerial drones, EDGE CEO Faisal Albannai told CNBC at an expo on Monday. EDGE is an advanced technology group of 25 Emirati companies and is ranked among the top 25 arms suppliers in the world.

“As these solutions begin to evolve and mature, local clients certainly prefer to buy at least local sovereign products because they are more flexible and meet their needs in a much shorter time. “I can do it,” he told CNBC’s Hadley Gamble.

The CEO aims to allow UAE companies to compete at the international and regional levels.

“I’m convinced that it’s good for local industry and local talent to develop such abilities as you grow and your needs continue to grow,” he said.

Middle East Weapons Fair, forecasters expect Gulf spending to fall by 10%

Source link Middle East Weapons Fair, forecasters expect Gulf spending to fall by 10%

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