Saudi spending rose 54 percent to $6.5 billion last year, while India imported $5.8 billion, according to data released Sunday by IHS. Imports will increase 52 percent to $9.8 billion this year, accounting for $1 of every $7 spent globally, IHS estimated, based on planned deliveries, AP said in a report.
This is definitely unprecedented, said Ben Moores, the reports author. Youre seeing political fractures across the region, and at the same time youve got oil, which allows countries to arm themselves, protect themselves and impose their will as to how they think the region should develop.
IHS Inc., based in Englewood, Colorado, is a provider of global market, industry and technical analysis.
Saudi Arabia is building its arsenal amid concern about a geopolitical shift in the Middle East as the United States looks for help in fighting the Islamic State militant group, said David Cortright, director of policy studies at the University of Notre Dames Kroc Institute for International Peace Studies.
The biggest beneficiary of the growing Middle Eastern market was the US, with $8.4 billion of arms shipments to the region last year, up from $6 billion in 2013. Saudi Arabia and the United Arab Emirates imported a combined $8.7 billion of defense systems last year more than all of Western Europe.
The Mideast Market
When we look at the likely export addressable opportunities at a global level for the defense industry, five of the 10 leading countries are from the Middle East, Moores said. The Middle East is the biggest regional market and there are $110 billion in opportunities in coming decade.
Boosting arms purchases may be a way for some elements in the Saudi government to remind the US of its importance as an ally because defense contracts translate into jobs that are critical to many communities, Cortright said. Boeing, Lockheed Martin and Raytheon, all based in the US, were the three biggest arms exporters among companies last year, according to the IHS report.
It may be a way of tempering that rapprochement with Iran, Cortright said. You can think of it as deepening ties in a time of uncertainty, as a possibly greater role with Iran looms on the horizon.
The Saudis are also worried about the rise of IS and are cooperating with the US-led coalition that has been targeting militants from the group with airstrikes.
From an objective security perspective, Saudi Arabia should be cooperating with Iran to deter and push back ISIS in Iraq. The old the enemy of my enemy is my friend approach, Cortright said, referring to the Islamic State group by another of its names. But Saudi Arabia has deep ideological and geopolitical differences with Iran that prevent it from considering such a temporary marriage of convenience.
Until recently, Saudi procurement programs were limited by the countrys ability to use advanced systems, Moores said. But with a growing number of educated and technologically agile people, the Saudis can now make use of increasingly high-tech hardware.
$64b Business
Globally, trade in military hardware rose for a sixth straight year in 2014, pushing worldwide imports to $64.4 billion from $56 billion.
The US remained the biggest arms exporter, with shipments rising 19 percent to $23.7 billion. Russia ranked second at $10 billion, up 9 percent from 2013. France, the United Kingdom, Germany, Italy, Israel, China, Spain and Canada rounded out the top 10.
India was the second-biggest defense importer in 2014, followed by China, the UAE, Taiwan, Australia, South Korea, Indonesia, and Turkey.
This record figure has been driven by unparalleled demand from the emerging economies for military aircraft and an escalation of regional tensions in the Middle East and Asia Pacific," Moores said.
By Financial Tribune
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