UAE defence conglomerate Edge is looking to localise production of components such as computer chips and drone manufacturing platforms as it aims to chart a course amid the pandemic, its chief executive said.
The global race to source and manufacture ventilators to provide life-support to Covid-19 patients was a vivid case study for anyone reliant on a supply chain and a "wake up call" to the defence industry, Faisal Al Bannai, managing director of Edge and the undersecretary of the UAE's Advanced Technology Research Council, told The National in an interview during the Global Aerospace Summit.
"In relation to the lessons learned from Covid, it's not really the products themselves. It's more about the subsystems and the components," he said.
To that end, Edge is looking to localise production of a greater number of component parts and the platforms that enable autonomous vehicles and drones, he said. These represent two rapidly growing segments of defence spending globally as modern systems demand greater computing power and there is larger reliance on autonomous technology.
Defence spending continues to increase and has thus far been largely insulated from the fallout due to the Covid-19 pandemic, despite the world economy experiencing the worst recession since the Great Depression.
Total global military expenditure rose 3.6 per cent to $1.917 trillion in 2019, the biggest annual growth in spending in a decade, according to the Stockholm International Peace Research Institute (SIPRI).
An analysis by the institute on how military spending might be impacted by the pandemic found that while it may take several years for any budget constraints to be felt due to the long timeline of arms deals, consolidation and nationalisation of production may become priorities following supply chain concerns during the pandemic.
Gulf countries are increasingly producing and procuring military equipment locally, signalling a shift in the way they do business with international defence companies. Tech-transfers and commitments to produce and buy equipment locally have become key factors in determining which companies secure major arms sales orders in the region.
There is a rising demand for agreements beyond simple "off-set" arrangements, projects that make weapons deals more attractive, to more complex knowledge-transfers and a slice of the work on weapons programmes to seal deals.
"Those who control the skies control the military landscape," Mr Al Bannai said. Given the UAE's relatively small population of less than 10 million, "drones and autonomous capabilities are a strategic need for our future".
He added that "a number of UAE platforms" for drones will be announced as soon as early next year, following up on an announcement made in February of the nation's first locally produced drone from Edge.
"We really want to use technology as a force multiplier for us and to really catch up and be among the leading nations when it comes to this capability," he said, adding that the drone market is worth nearly $100 billion, the majority driven by defence spending.
Commenting on the Abraham Accord, normalising relations between the UAE and Israel, he said it shows a will from the government "to bring peace to the region, and really move the ball forward".
"It's a major sign of the country's tolerance, a major sign of the country's future in really uniting the region and being able to deal with different conflicts that we have," he said, adding that there is potential for deals with Israel in the defence sector.
Last year, the UAE formed Edge, a defence conglomerate specialised in developing advanced technology for weapons systems, cyber protection and electronic warfare, by merging 25 entities. The company has 12,000 employees.