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North Africa, led by Algeria, seen as emerging arms market

Oct. 28, 2013 at 4:23 PM   |   Comments

ALGIERS, Algeria, Oct. 28 (UPI) -- North Africa is expected to become a key defense market, led by regional military heavyweight Algeria, increasingly the linchpin of the battle against al-Qaida in Africa, amid major upgrades for military and security forces, a new study says.

Oil- and gas-rich Algeria will remain the continent's leading defense market because of its procurement program for boosting its counterterrorism and counterinsurgency capabilities, the Strategic Defense Intelligence market research group reports.

The study, "The Future of the Algerian Defense Industry," envisages North Africa -- primarily Algeria, Morocco, Tunisia and Libya -- becoming a major defense market by 2017.

Despite its political and economic difficulties, "Algeria remains one of Africa's attractive defense markets, with a defense spending capability that is expected to increase in the forecast period, primarily owing to increased energy exports and an arms race in the North African region," noted SDI, which is based in Maryland.

It estimated the Algerian defense market will maintain a steady growth rate of 6.2 percent a year until 2017, largely because of a force modernization program amid a growing jihadist insurgency across the region.

"Another factor driving Algeria's defense procurement is the neglect the industry has faced for many years," the report observed.

During the Cold War, Algeria, although officially in the non-aligned camp, obtained the vast majority of its military equipment from the Soviet Union.

Since the Soviet collapse, it has continued doing business with Moscow, which is likely to be the recipient of any major arms purchases made by the Algiers government.

Even so, SDI saw "the opening up of Algeria's market to suppliers other than those in Russia," and said that "is expected to make it an exciting proposition for foreign companies looking to enter the market."

The International Institute for Strategic Studies in London observed in the 2012 edition of its annual Military Balance that lists global military expenditures that among Middle Eastern energy exporters Algeria's defense spending increased by 44 percent in 2011 amid generally high oil prices.

"Oil exporting countries, particularly those that perceive a deteriorating security environment or face a specific threat, will probably use their growing revenues from hydrocarbon exports to continue to increase defense spending, despite imperatives of social-security spending," the institute noted.

Algeria would be expected to fall into that category since it has sought to avoid internal political unrest amid the so-called Arab Spring uprisings that toppled dictators in Egypt, Tunisia, Libya and Yemen in 2011-12 by significantly increasing spending on social programs.

Algeria has suffered from Islamist militancy more than most regional states. It was engulfed by a civil war against Islamist radicals throughout the 1990s.

The Islamist insurgency was crushed but it spawned al-Qaida in the Islamic Maghreb, the jihadist group that's central to the current Islamist threat that now stretches from Morocco to Egypt's Sinai Peninsula and is moving southward into Nigeria and East Africa.

In January, an AQIM offshoot seized the In Amenas natural gas plant in the Sahara of southeastern Algeria. Most of the 32 attackers were killed, along with 27 foreign technicians, when Algerian Special Forces stormed the complex.

The Algerians currently head a joint counterinsurgency program with other regional states but remain suspicious of their North African neighbors.

The Algerian military has given no indication of what its procurement program entails. But Arab military analysts say it focuses primarily on counterterrorism, such as helicopters, drones and rapid deployment ground systems.

That includes a $248 million contract for 1,200 variants of the Fuchs armored personnel carriers produced by Rheinmetall of Germany. Delivery is scheduled through the next decade. Algeria acquired 54 Fuchs in 2011.

Algeria is also planning to acquire APCs from NIMR Automotive, a subsidiary of Tawazun Holdings in the United Arab Emirates, and is expected to start joint production of four-wheel and six-wheel variants in the Algerian city of Khenchela this year.

NIMR is eager to expand into North Africa, where it has already delivered more than 500 APCs to Libya, Jordan, Lebanon and the Emirates. Some 1,800 more are on order.

Overall, defense industry analysts estimate that African defense spending will exceed $20 billion over the next decade.

© 2013 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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