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U.S., Europeans battle for big Persian Gulf arms deals

Dec. 3, 2013 at 12:33 PM   |   Comments

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DUBAI, United Arab Emirates, Dec. 3 (UPI) -- U.S. and European defense companies, hard hit at home by shrinking military budgets, are battling to make big-ticket sales in Saudi Arabia and the Persian Gulf monarchies, whose collective defense spending grew by 20 percent in from 2011 to 2012.

"In some cases," observed Oxford Analytica, "failure to win orders could mean the end of several major programs."

From 2008 to 2011, the six member states of the Gulf Cooperation Council -- Saudi Arabia, the United Arab Emirates, Kuwait, Qatar, Oman and Bahrain -- acknowledged arms deals totaling more than $75.6 billion, the U.S. Center of Strategic and International Studies reported in September.

Nearly $52 billion of that, or 70 percent, consisted of weapons for Saudi Arabia while the Emirates, which have built up a formidable air and missile strength in recent years, accounted for $17.2 billion.

It remains unclear what effect the interim nuclear agreement reached by the U.S.-led Western powers and Iran last month will have on the monarchies' arms procurement policies given Tehran's contentious nuclear program remains essentially intact.

The Saudis have flirted with Russia as these events have unfolded. Prince Bandar bin Sultan, the Saudi intelligence chief, reportedly offered Moscow $15 billion in arms purchases in July if it stopped backing Syria, Iran's strategic ally.

By all accounts, the Russians would be prepared to go a long way to see Moscow's Cold War influence restored in the region, and weapons sales are a key tool.

Iraq signed a $4.3 billion deal with Russia in October 2012 for air-defense missile systems and attack helicopters.

Moscow has been sniffing around Cairo as well, reportedly dangling deals of as much as $4 billion, since the Americans cut off some military aid to the military regime.

But the Chinese are also looking to muscle in on the gulf arms market, for decades the treasured preserve of the Americans, British and French.

NATO-member Turkey's surprise announcement in September it had opted to buy a long-range air and missile defense system from China for $4 billion, even though it may be impossible to integrate into NATO's architecture, was a signal the Chinese are elbowing their way into the regional arms market.

The decision has yet to be finalized, apparently dependent on whether China agrees to a co-production deal.

The Chinese system, known as T-Loramids, is produced by the state-owned China Precision Machinery Import-Export Corp., and is believed to be the FD-2000, an export version of the China's H-Q-9 system, based on Russia's formidable S-300 air-defense system.

Turkey selected it over the U.S. Raytheon-Lockheed Martin partnership's Patriot PAC-3, the French-Italian Eurosam's SAMP/T Aster 30, and Russia's S-400.

China is "offering increasingly sophisticated weaponry at rock-bottom prices," said Asian defense analyst Richard Bitzinger of the S. Rajaratnam School of International Studies in Singapore.

There have been reports the Emirates are looking at China's Yi Long Pterodactyl unmanned aerial vehicles, which can carry BA-7 air-to-ground missile and YZ-212 laser guided bombs, among other weapons.

The reason the Emirates are looking eastward could be because the Americans have been reluctant to share advanced UAV technology or precision weapons with the Gulf states, partly because they might one day be used against Israel.

Whether this reluctance will continue in light of the growing pressure on U.S. defense companies to export to the gulf petro states is not clear, but there have been signs this policy may be changing -- if only to try to keep the Chinese and the Russians out.

For instance, the Emirates were recently allowed to purchase General Atomics MQ-1 Predator UAVs.

The Pentagon notified the U.S. Congress in October of plans to sell Saudi Arabia $6.8 billion worth of precision weapons that include 650 Boeing AGM-84H standoff land attack missiles.

But Western companies face problems if they can't consistently secure major exports.

"In some cases, such as BAE Systems Bradley Fighting Vehicle, winning orders from Gulf states and other countries in the Middle East may be vital in keeping production lines open," Oxford Analytica said.

"European aerospace companies also need significant sales in the region to keep projects such as the French Dassault Rafale jet and the multinational Typhoon going much beyond 2020."

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