Defence spending in the Middle East is set to grow further in the coming five years as Gulf Arab nations embark on military modernization programs. Market intelligence firm Forecast International predicts a 14 per cent rise in spending over the next five years. At the national level, defence investment generally represents 10-20 per cent of total state expenditure annually. For 2010, Forecast estimates total GCC defence/security investment at $68.3 billion, expecting the total to increase to $73.4 billion in 2011 and continue growing to $82.5 billion by 2015.
According to the Stockholm International Peace Research Institute (SIPRI), the countries in the Middle East spent $111 billion on military expenditure in 2010, an increase of 2.5 per cent over 2009. The largest absolute rise was by Saudi Arabia. Pieter Wezeman at SIPRI’s Arms Transfers Programme also expects continued growth, although he is more careful with his predictions due to the difficulty in obtaining exact data. He describes Saudi Arabia and the UAE as standing out in the region due to a combination of factors.
“Firstly, they have large amounts of oil that can be used to pay for the equipment. The UAE considers Iran to be its main threat, and are in a sense preparing for the worst,” he says. “Saudi Arabia also views Iran as an enemy, but on the other hand has a problem in neighbouring Yemen. The result is that the Saudis invest large sums in its border security, which is something they have not done before. Finally, also with regard to Saudi Arabia, potential internal threats may play a role in the range of equipment bought.”
Saudi Arabia aims to upgrade its air fleet with new and refurbished F-15 jet fighters and new helicopters. There are also rumours of a major Royal Saudi Navy upgrade program. The UAE is undertaking a modernization of its Air Force, including an approved FMS agreement for the purchase of 60 AH-64D Apache helicopters. The country is also in the process of considering successors for its fleet of Mirage 2000 jet fighters in what may ultimately prove to be a 60-unit buy worth up to $10 billion.
"Fearing Iran's regional strength, the GCC states continue to seek a distinct qualitative military-technological edge over Tehran," says Forecast International Middle East Defense Analyst Dan Darling. "But Iran's manpower and missile strengths camouflage some serious weaknesses, such as command-and-control shortcomings, a combat aircraft fleet falling into disrepair, and an armoured vehicle inventory of questionable capability. Other than its long-range missiles, Iran is limited for now in its ability to project conventional military power across the Gulf. In other words, some GCC countries may be susceptible to over-buying for a certain kind of threat that is not readily apparent."
Iran spends around $9.3-9.5 billion annually, a trend Forecast expects will continue in the near term. This level of expenditure places it in the top five defence spenders in the Middle East, behind Saudi Arabia, Israel, Iraq and the UAE. Much of Iran's military investment goes toward personnel costs, missile programs and upgrades of existing platforms.
Faced with increasing security challenges as a result of the impending departure of U.S. forces from the country, Iraq is expected to continue the build-up of its military. According to Forecast International, Baghdad will invest an average of $12.5 billion annually through 2015. The principal thrust of investment will be the bolstering of the Iraqi Air Force.
However, the planned investments may be hindered by the U.S.’ financial problem at home. Since 2005, Pentagon has allocated more than $19 billion to the Iraqi Security Forces Fund. However, the planned investments may be hindered by the U.S.’ financial problem at home. Since 2005, Pentagon has allocated more than $19 billion to the Iraqi Security Forces Fund.
"Although the Iraqi government would like to diversify its supply chain, the U.S. remains its principal provider of military equipment," says Dan Darling. "So long as U.S. funding toward the development of the new Iraqi Security Forces continues, this is unlikely to change. Should Washington turn off the tap, others will surely step into the void, including France, Russia and suppliers from Eastern Europe."
Due to the large number of threats it faces, Israel continues to place a premium on military funding. Aided by U.S. Foreign Military Financing (FMF) of $3 billion annually, the country continues to invest in modern jet fighters, its multi-layered anti-missile air defence network, unmanned aerial vehicles, heavy infantry fighting vehicle and a slew of other projects.
"The major defence markets of the Middle East continue to be dominated by the U.S.," Darling says. "Russia has footholds in Syria and Yemen and is making efforts to help equip the Lebanese Armed Forces. But its regional market share pales in comparison to that of the U.S. With President Medvedev signing a decree back in September banning the supply of a variety of Russian armaments to Iran, the other major market for which Moscow was the principal supplier is now likely to be ceded to China."