RIYADH, Saudi Arabia, Dec. 6 (UPI) -- Persian Gulf states are stepping up efforts to acquire unmanned aerial vehicles, which in turn is pushing the United States, its defense companies battered by dwindling domestic military spending, to loosen restrictions on selling these systems to Arab states.
Britain and the Europeans, also hit by shrinking defense budgets, are also looking for UAV sales in the gulf. But their aerospace companies are at a disadvantage because their governments have not provided the funding for development programs to match those of the Americans or the Israelis.
This has opened the lucrative gulf market to some wild-card manufacturers, such as South Africa's state-owned Denel Dynamics, which is reported to be helping Saudi Arabia develop a missile-armed UAV program based on its Seeker II craft.
The U.S. defense sector expects the Middle Eastern UAV market to grow in the next few years, based largely on the robotic technology of the unmanned craft armed with Lockheed Martin's AGM-114 Hellfire missiles that have become the symbol of U.S. global war against al-Qaida.
Phil Finnegan, director of corporate analysis at the U.S. Teal Group aerospace defense consultancy, estimates the Middle East market for UAVs is currently worth around $260 million a year.
He predicts this will total around $3.8 billion over the next decade, with the Middle East accounting for about 8 percent of the global UAV market.
Teal estimates the global market for UAVs is likely to double from $5.2 billion to $11.6 billion by 2023.
"In the international market, the Middle East is going to be very important in terms of size and for U.S. manufacturers," Finnegan predicted.
Saudi Arabia and the United Arab Emirates -- a confederation of seven desert sheikdoms that is a major oil producer with a formidable air and missile force -- are seen as the main markets.
The Emirates became the first regional state to acquire a U.S. UAV system in February when it acquired Predator XP under a $197 million deal with General Atomics of the U.S.
The XP is the unarmed export version of the MQ-1 Predator that's been the mainstay of the U.S. drone campaign against al-Qaida for the last decade.
AAI Corp., part of Textron Systems, is looking to sell its Shadow M2 platform, a modified larger version of the RQ-7B Shadow deployed by the U.S. Army and Marine Corps, to Saudi Arabia.
The high-wing M2 Tactical Unmanned Aircraft System, which was used in Iraq, has a ceiling of 15,000 feet.
Finnegan said he believes U.S. companies will take the major slice of the Middle East UAV market once the Pentagon clears their systems for export.
Until this year, all such sales were restricted to the U.S. military, the Central Intelligence Agency and longtime allies such as Britain, Italy and Turkey.
All other sales were blocked under the Missile Technology Control Regime, an international agreement among states designed to limit the spread of advanced long-range weapons technology.
Economic pressure because of U.S. defense budget cuts means U.S. defense firms have to rely on exports to maintain production lines, and this is leading to a gradual relaxation of export rules at a time when a civilian market for UAVS is opening up the U.S.
U.S. diplomatic cables released by WikiLeaks in 2012 showed Washington had turned down requests for UAVs, both surveillance and armed, from Saudi Arabia and the Emirates.
The Europeans have not really dented the Middle East market, largely because of poor funding for UAV programs, and have resorted to acquiring U.S. Systems. France, for instance, is currently acquiring 12 new General Atomics Reapers.
In the United Arab Emirates, which has the most advanced indigenous defense and aerospace industry in the gulf, the Abu Dhabi-based Adcom Systems is starting to produce the Yabhon United 40 UAVs.
Adcom is negotiating to sell two to the Russians, who've lagged badly in developing UAV technology, and have relied on systems bought from Israel.
The long-endurance Yabhon United 40 Block 5 variant can carry 10 air-to-ground missiles, says Adcom's chairman and chief designer, Ali al-Dhaheri. Russia's RIA Novosti news agency says Moscow seeks to acquire as many as 100 UAVS.
The Emirates' $55 billion Mubadala investment fund boosted its stake in Italy-based Piaggio Aero in November from 33 percent to 41 percent as the company unveils its P.1HH Hammerhead drone, also funded by India.
