British Prime Minister David Cameron has unveiled a major sales push for the Eurofighter Typhoon armed with new weapons systems, with the Persian Gulf states of the United Arab Emirates and Oman as key targets.
The Typhoon is built by the German and Spanish arms of European aerospace giant EADS, BAE Systems, Britain's leading defense contractor, and Italy's Finmeccanica.
Cameron's decision to throw London's weight behind the Typhoon underlines the growing importance of export sales for major defense companies amid severe cutbacks in military spending by the United States and Europe.
Finmeccanica "has revealed that the Eurofighter partners are completely revamping how they price the aircraft, standing on its head a 20-year-long approach seen as uncompetitive now that Typhoon is moving into competitive tenders in Asia and the Middle East," the Financial Times reported.
Cameron, who has lobbied hard for the Typhoon, believes that the "integration of the Meteor missile, an electronically scanned radar, enhancements to the defensive system, further development of the air-to-air and air-to-ground capabilities and integration of new weapons would all boost 'the world-beating capabilities of this fantastic aircraft'," the FT reported.
Cameron's export drive follows the failure of the Typhoon's European consortium to secure a $20 billion contract to supply India with 126 of the jets to replace its fleet of rapidly aging Soviet-era MiG-21s, one third of its combat air strength.
France's Dassault Aviation was named the winner of the contract, one of the biggest military aviation deals ever, in January.
Dassault had submitted the lowest bid in the competition that initially had included Boeing's F/A-18 Lockheed Martin's F-16, Russia's MiG-35 and Sweden's Saab Gripen.
Jane's Defense Weekly observed at the time that losing the Indian deal was "a big loss for Eurofighter. It was widely tipped to be the favorite and had major support from the big beasts of the Eurofighter nations.
"Both Germany and the U.K. invested a lot of time in pushing the Typhoon, so this will hurt."
A month earlier, the Eurofighter lost out in an $8 billion to supply 42 fighters to Japan.
Lockheed Martin's problem-plagued F-35 Joint Strike Fighter, considered the most advanced combat jet in the world, won.
However, in 2007 the Typhoon consortium had secured a $7.21 billion contract to supply Saudi Arabia with 72 aircraft.
Saudi Arabia is currently flush with petrodollars because of high oil prices, that could go higher in the coming weeks amid growing concerns of conflict between the United States and Iran in the Persian Gulf over Tehran's refusal to scale back its contentious nuclear program amid tightening Western economic sanctions.
A European Union boycott of Iranian oil exports took effect July 1, threatening to reduce the Islamic Republic's vital oil sales even further.
Tehran has threatened to block the strategic Strait of Hormuz, the only gateway to the gulf and through which pass some 35 percent of the world's oil supplies, including those of Saudi Arabia and the gulf states.
Saudi Arabia and the United Arab Emirates have alternative overland pipelines that could ensure reduced exports are maintained if the strait is closed. They would thus benefit from skyrocketing oil prices as global supplies dwindle.
So as Western defense contractors find their domestic sales plummeting because of budgetary cutbacks, the Middle East remains a key target for increased exports to help keep U.S. and European assembly lines running.
In Britain, defense cuts forced BAE to lay off 3,000 of its 38,000 staff at its military aircraft division in northern England this year. It's also mulling the closure of one of its three shipbuilding yards with 1,500 layoffs.
In the United States, Boeing was reported earlier this year to be planning closing down its military aircraft operations in Kansas by the end of 2013, with some 2,200 layoffs.
The Middle East then is now crucial for Western defense companies.
A recent analysis by Frost and Sullivan, a leading growth strategies consultancy, said Middle Eastern states, particularly Saudi Arabia and the Emirates, the two Arab military heavyweights in the gulf facing Iran, are engaged in major procurement surges.
These are focused building up air power and air-defense capabilities against Iranian missiles.
Most of their military purchases will undoubtedly be from the United States, their main arms supplier. Britain and France are the primary European arms suppliers to the Saudis and their gulf allies.