Middle East remains major arms market

Feb. 9, 2012 at 1:00 PM
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WASHINGTON, Feb. 9 (UPI) -- The Middle East arms market holds promise for Europe's defense industry despite its political turmoil, a market intelligence and analysis company said.

Forecast International, which has headquarters in the United States, estimates the Gulf Cooperation Council countries -- Bahrain, Kuwait, Oman, Qatar, the United Arab Emirates and Saudi Arabia -- will spend a combined $385 billion for defense and security needs over the next four years.

Iraq is expected to invest $65 billion in its security forces.

Although the United States is the dominant arms and equipment supplier to the region, Arab concerns of over-reliance on the United States could result in some countries diversifying equipment sources, Forecast International said in its latest study.

"The market for arms sales in the Middle East continues to be robust, notwithstanding the relative shift in security focus from external to internal concerns," it said, and that military programs that include expansions in air, air-defense and naval capabilities are the principal drivers of procurement policy.

Several factors have contributed toward the region's acquisition of defense products, including Iran's growing assertiveness.

"With oil prices now hovering around $100 per barrel and security anxieties in several Gulf Arab kingdoms heightened, there is little reason to expect a slowdown in the defense procurement tendencies of the region," said Dan Darling, Forecast International's Middle East military market analyst.

Forecast International noted that in the last decade, the Middle East constituted 20 percent of the world's export market for defense and security products.

"No matter where you look, the fragility of the political situation in many countries translates to increased security anxiety, driving procurement policy forward," Darling said. "This is the same whether it relates to Iraq, Jordan, Israel or the (United Arab Emirates).

"Security worries combined with force modernization programs equals a ripe export market for foreign suppliers."

Israel, the report said, shouldn't be left out of the market equation.

"Home to an already tenuous security environment now perceived as that much more fragile in the wake of the Arab Spring events in Egypt and Syria, Israel, too, is intent on pressing forward with projects in the areas of missile defense, cyberwarfare, tactical mobility and precision firepower."

Forecast International said it expects that Israel will spend more than $77 billion over the next five years on modernization and acquisition despite political pressures to spend more on social welfare programs.

Competition to supply equipment will remain intense. The United States has no inclination to lose its dominant position as the region's major supplier, and major European manufacturers are looking intensely to gain market share as government budget cuts in Europe negatively affect acquisition programs.

Dassault of France, which just won a contract to supply Rafale jet fighters to India, hopes to market the aircraft to several Middle East nations that are considering aircraft replacements, and Eurofighter, which lost out on the Indian deal, is hoping to sell its Typhoon jet to Oman.

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