Idex 2017: Mena defence spending to rise this year as conflicts create demand for arms

As Mena defence spending tries to recover from last year’s first decline in eight years, multiple ongoing conflicts in the region are expected to keep the arms industry busy. Mena defence spending, which fell last year almost 2 per cent year-on-year because of low oil prices, is expected to rise 1.4 per cent to US$165 billion this year as countries face a number of conflicts, according to the consultancy IHS Jane’s. “Defence spending in the region is expected to rise to around $180bn by 2020 and we’ll also see this spending being heavily supported by ‘off-budget’ funds where key equipment requirements emerge,” said Craig Caffrey, a senior analyst at IHS Jane’s. Some deals, particularly for the UAE, could emerge this week at the International Defence Exhibition (Idex) taking place in Abu Dhabi, where 1,235 companies will participate in the biennial event, a 3 per cent increase on 2015. There are new developments likely to spark new spending. The US president Donald Trump has called the nuclear pact struck between major powers and Iran in 2015 a “disaster” and “the worst deal ever negotiated”. Also this month, the Trump administration slapped new sanctions on individuals and companies in Iran after the country test-fired a ballistic rocket. Iran’s backing of Houthi rebels in Yemen and the Syrian regime have also exacerbated the situation. “From a geo-strategic standpoint, Iran remains the most critical challenge for the [Arabian] Gulf states,” said Aleksandar Jovovic, of the aerospace and defence consultancy Avascent. The Gulf stand-off with Iran has already led to a spike in investments in missile defence systems in the region over the past five years and is likely to continue if Iran’s defence budget swells, said Mr Caffrey. There is likely to be a shift in spending patterns owing to the nature of new conflicts. “We’ve seen the acquisition of strategic transport and tanker aircraft, intelligence-gathering platforms and precision guided munitions … which are capabilities that states within the region have not traditionally focused upon,” said Mr Caffrey. “And that’s down to attempts to build the kind of capabilities required to conduct operations beyond their own borders. Until recently, military capabilities in the region have been very much focused upon territorial defence, so this transitional process will take time and significant amount of funding.” Mena countries involved in conflicts are likely to prioritise spending on weapons, maintenance, repair and overhaul (MRO) of all systems and platforms, including aircraft, and land vehicles among others, said Mr Jovovic. The region also may experience an uptick in investment in naval capabilities, which are needed to protect the strategic Strait of Hormuz in the Gulf and Bab El Mandeb strait in the Red Sea. “Yemen is not only land or air warfare. It is a naval war also,” said Mustafa Alani, the senior adviser for the Geneva-based Gulf Research Center. “Again there is a gap for equipping special forces. You need to intensify the use of drones and special forces for this war. You don’t need army and tanks.” Another new development is the US decision last year to halt some arms sales to Saudi Arabia because of civilian casualties in Yemen. Although Mr Trump has yet to voice his views, Saudi Arabia and other countries may seek new suppliers. “These concerns may be a reason for Saudi Arabia to diversify its pool of suppliers. It is now very much dependent on the US, on Europe,” said Pieter Wezeman at the Stockholm International Peace Research Institute. “They do look with interest on what Russia and China may have to offer, but that has not led to any major development yet.” __________________________________ Idex 2017 ■ UAE will count on technologies to keep terror threats at bay ■ South African defence firm targets region with military variant of light aircraft ■ Bell Helicopter eyes Gulf deals ■ Preparation for Idex under way in Abu Dhabi - in pictures __________________________________ dalsaadi@thenational.ae Follow The National's Business section on Twitter

Idex 2017: Mena defence spending to rise this year as conflicts create demand for arms

Mena defence spending, which fell last year almost 2 per cent year-on-year because of low oil prices, is expected to rise 1.4 per cent to US$165 billion this year.