Saudi Arabia becomes biggest defence equipment importer with $9.8bn set to be spent this year

Inbound shipments jumped 54 per cent in 2014 when Saudi Arabia also became the top trading partner with the US, report from IHS said.

Saudi security forces perform manoeuvres during a parade in preparation for the annual haj pilgrimage in Mecca. Mohammed Salem / Reuters

Saudi Arabia is now the world’s biggest importer of defence equipment, with spending expected to reach US$9.8 billion in 2015, according to a report from the research firm IHS. That is a rise of 42 per cent compared to the previous year.

“Growth in Saudi Arabia has been dramatic, and based on previous orders, these numbers are not going to slow down,” said Ben Moores, a defence analyst at IHS.

Planned defence spending in Saudi Arabia shot up following the Arab Spring and the rise of ISIL, leading the kingdom to overtake Russia as the world’s third-largest overall spender on defence at $80bn annually.

Saudi Arabia’s 2015 fiscal budget was the largest in the country’s history, with expenditures of 860bn Saudi riyals (Dh842.22bn) planned. The budget did not include an estimate for total defence spending, although in 2014 military expenditure accounted for about 35 per cent of planned expenditure.

The UAE and Saudi Arabia imported more arms from the US last year than all of western Europe combined, spending $8.6bn between them on defence imports.

At the recently concluded Idex in Abu Dhabi, the UAE Armed Forces signed 33 deals worth Dh18.3bn with local and overseas defence companies.

Instability in Libya, Yemen, Syria and Iraq, tensions with Iran and the Arab Spring have concentrated the minds of the region’s defence ministers in recent years.

“There is an immediate military threat emerging on the Saudi periphery,” said Sabahat Khan, a defence analyst at the Institute for Near East and Gulf Military Analysis.

“The threat from ISIL has reached the Saudi border. It’s going to be a battle that will span many years. In Yemen, to the south, the [Houthi] rebels are creating problems ... that’s in addition to the long-standing threat from Iran.”

The Middle East is also the world’s fastest growing defence market, with annual spending totalling about $150bn, according to the Stockholm International Peace Research Institute (Sipri).

Global defence spending totalled about $1.75 trillion last year, says Sipri.

“When we look at the likely export-addressable opportunities at the global level for the defence industry, five of the 10 leading countries are from the Middle East,” Mr Moores said.

Governments across the Middle East and North Africa are expected to spend about $920bn on arms over the next decade, IHS estimates.

The global arms import-export trade grew to $64.4bn in 2014, up from $56.8bn the previous year.

The US remains the world’s largest exporter of arms, followed by Russia, France and the UK.

Bilateral trade in defence accounts for less than 1 per cent of the overall defence market. The militaries of Europe and the US, which account for the majority of global arms spending, prefer to buy from domestic suppliers, aiming to boost their own economies.

China, the world’s second-largest spender on defence, is to step up its military spending by 10 per cent to $144.2bn in 2015. This is still some way short of the $581bn spent by the US last year.

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