Emirates invests heavily in arms industry

ABU DHABI, United Arab Emirates, March 28 (UPI) -- Raytheon is expected to establish local manufacturing plants when it upgrades the United Arab Emirates' Patriot missile systems, boosting a burgeoning defense and aerospace industry that's becoming the most advanced in the Arab world.

Abu Dhabi, the richest of the seven emirates that make up the United Arab Emirates, spearheads the nascent defense industry emerging in the member states of the Gulf Cooperation Council -- the Emirates, Saudi Arabia, Kuwait, Qatar, Oman and Bahrain.

Abu Dhabi signed defense contracts worth $1.8 billion in February as part of its drive to diversify its economy, which is primarily oil exports, principally from its own fields.

The growing confrontation between Iran and the United States and its Persian Gulf allies and the massive arms drive this has engendered in the regional states, primarily Saudi Arabia and the Emirates, has given impetus to Abu Dhabi's drive to develop its own defense industry.

"Heightened threat perception around the Arab gulf states from Iran is the main driver for the increase in defense spending, although there's also a threat from terrorism," said Riad Kahwaji, chief executive of the Institute for Near East and Gulf Military Analysis in Dubai.

These days, the emirate is lining up joint ventures with defense industry companies like Raytheon, Lockheed Martin and the Boeing Co., all of the United States, and BAE Systems, the largest defense contractor in Europe.

The focus increasingly is on aerospace and aircraft technologies, with thousands of new jobs expected to be generated in this rapidly expanding sector.

The emirate even has ambitions of getting in on the space race. In 2009, Aabar Investments bought a 32 percent stake in Virgin Galactic, the world's first commercial spaceline.

Virgin Galactic, founded in 2004 as part of British tycoon Richard Branson's Virgin Group, plans to provide suborbital flights for paying passengers and eventually orbital space flights as well.

Aabar secured the rights to launch space flights from Abu Dhabi for tourists as well as scientific research and has announced plans to build a spaceport in the emirate.

Abu Dhabi is also building satellites. Its first, Yahsat 1A, a telecommunications craft, is expected to be launched soon atop an Ariane 5 rocket from French Guyana.

A second launch is expected this year by the Al-Yah Satellite Communications Co. a subsidiary of the Mubadala Development Co., a government-owned enterprise that's at the forefront of the defense industry drive.

Mubadala subsidiary Abu Dhabi Aircraft Technologies has a partnership venture with Sikorsky Aerospace and Lockheed Martin, both of the United States, in the Advanced Military Maintenance, Repair and Overhaul Center.

Abu Dhabi Ship Building, arguably the most advanced defense contractor in the GCC, has built two 420-ton landing craft for the Bahrain navy at the company's $30 million headquarters in the Mussafah industrial zone.

Along with Mubadala, established in 2002 as Abu Dhabi's investment vehicle in sectors as diverse as aerospace, energy, infrastructure and services, ADSB is in the forefront of building an indigenous defense sector.

It was established in 1995 as a joint venture between Newport News Shipbuilding of Virginia -- now owned by the Northrop Grumman Corp. -- and the UAE Offset Group, now owned by the Abu Dhabi government.

Its main contract so far is a 2004 order worth $1 billion to build five of the six planned Baynunah-class corvettes for the emirates' navy with ADSB's strategic partner, Constructions Mecaniques de Normandie of Cherbourg, France.

The Baynunah-class vessels, with waterjet propulsion and designed for multiple missions, represent "the most modern and sophisticated warship ever produced in any of the GCC countries," says ADSB Vice President William Stewart.

The United Arab Emirates has become a military heavyweight in the Persian Gulf region, particularly with the buildup of its air, naval and missile forces in recent years.

BAE Systems of the United Kingdom, Lockheed Martin, Boeing and Raytheon, the leading U.S. defense manufacturers, "have a strong foothold in the regional defense industry and expect to win big contracts," The Middle East Economic Digest reported.

Among other deals, the Emirates is finalizing a $7 billion contract with Lockheed for the Theater High Altitude Air Defense missile system. Abu Dhabi is also discussing the construction of a missile maintenance facility with Mubadala.