Gulf States to maintain
defense spending despite oil price slump
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[February 18, 2017]
By Stanley Carvalho
ABU DHABI (Reuters) - Gulf Arab states are
poised to continue to spend billions of dollars on defense despite low
oil prices causing severe budget deficits forcing Gulf States to
introduce austerity measures and cut spending.
Saudi Arabia's total defense budget is forecast at $82 billion in 2016,
steadily rising to $87 billion in 2020 while that of UAE is put at $15.1
billion in 2016 reaching $17.0 billion in 2020, according to Teal Group,
a U.S-based defense analysis firm which has also forecast increased
spending by Kuwait, Qatar, Oman and Bahrain.
"Defense spending is linked to national security and threat perception,
not resource prices," said Richard Aboulafia, vice president of Teal
Group. Oil prices more than halved in 2016 from their peaks in 2014.
"Even if low oil prices might complicate the timing of defense deals, it
really has little to do with the total medium- and long-term volume of
sales," he added.
Saudi Arabia and the UAE's defense spend as a share of their GDP is the
highest in the world, according to the Stockholm International Peace
Research Institute.
That means big business for arms manufacturers at the biennial
International Defense Exhibition (IDEX), starting on Sunday in Abu
Dhabi, capital of the United Arab Emirates.
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Big contracts at stake include the UAE's requirements for up to 60 fighter jets.
Talks have been ongoing with France's Dassault Aviation and Britain's BAE
Systems.
Saudi Arabia is in the middle of its Eurofighter and F-15 acquisition programs,
but they are due to be completed by 2019, after which the country will need more
fighters to meet its ambitious force structure goals.Kuwait has requested 28
Boeing F/A-18 E/F Super Hornets, with an option for a total of 40 aircraft while
Bahrain has expressed interest in the Lockheed Martin F-16.
Aside from fighter jets, countries in the region are looking to upgrade missile
systems and to buy helicopters, tanks, drones, and other hardware to strengthen
internal and external security.
The UAE will announce deals at IDEX 2017, the only time such contracts are
awarded officially. At the 2015 IDEX, it announced deals worth $5 billion, up 30
percent over 2013.
"High or low oil prices, defense and security are irreplaceable, we cannot
compromise," a senior UAE military official told Reuters.
Around 1,235 companies from 57 countries are exhibiting at the expo, the
region’s largest such show.
(Reporting By Stanley Carvalho; Editing by Eric Meijer)
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