Middle Eastern Defence Procurement

This Report is intended to outline the necessary defence procurement mechanisms within the Middle Eastern Armed Forces. Related defence procurement issues such as the procurement structure of the involved ministries of Defence, Foreign Affairs and Internal Affairs will contribute to a deeper knowledge of the power-triangle involving armed forces, Government and industry within region. Defence procurement, indigenous or exogenous, is the means to diversify or modernise the armed forces in times of rapidly changing geopolitical or regional constellations. The decisions made regarding military procurement are an important component of both economic and military policy in many countries. A comparative analysis can serve as a vehicle for increasing understanding and to enhance the use, and improve the outcome for defence industrial projects between the Middle East and the Western states. To say that it is possible to transplant Western defence procurement systems to the Middle Eastern environment is a falsification of reality. Especially Israel's or Saudi Arabia's case, which is very complex, even unique. International military aid and indigenous production are central factors in its specific procurement decisions. Confidentiality and accountability in the decision making process are of particular interest and will be addressed further in the Report.

The end of the Cold War and the disastrous results of the Gulf War made it clear to most of the states of the region that a total review of the armed forces was necessary. The outcome of this general overview has been an enormous drive to reform internal structures and the modernisation of its armed forces. To reach the necessary level of modernisation the Arab States are forced to rely on the available market forces. The top five arms exporters, US, France, Britain, Russia and China have consolidated their old position in the region. However, several facts have emerged during the last years that indicate that even in this pro-Western traditional market, diversification of suppliers has been sought. Market forces in the region and in the world as a whole has resulted in a changing constellation in which European exporters such as the Netherlands, Germany, Italy and Spain have gained a place in the arms market in the Gulf and Northern Africa. To identify the necessary possibilities for arms and arms technology exports to the region it will be necessary to identify the players. Special attention will be given to the countries of, Israel, Egypt, Jordan, Saudi Arabia, Kuwait, Qatar and the UAE. Turkey is a problem on its own. As a Nato-member it has to modernise and standardise according to NATO regulations and projections. Its modernisation projections are however above the projected NATO planning requirements. It will provide a very important section in the arms procurement market of the next years and as such is included within this Report.

Defence procurement in the Middle East during the last decades has almost totally concentrated on the specific requirements of the Arab-Israeli conflict. As this period of hostility was predominately supported through Cold War rivalries, its subsequent thaw has had a dramatic effect on procurement climate within the region.

The decline in East-West tensions, the collapse of the Eastern Block and the unexpected resurgence of intra and inter-state rivalries in the Arab world have significantly changed the arms-market environment. Influenced by the Gulf War (1990/91) there has been a change from quantity to quality procurement. The embarrassment felt by almost all of the Gulf States governments was palpable. The notion that their security depended on the help of Western forces together with the traumatic domestic experience of having to allow Western soldiers, including women, stationing in the heart of Islam all had their negative repercussions. The call for democratisation and liberalisation have brought several governments to the point of collapse. External involvement and outright attempts to overthrow several governments have resulted in a security drive of unknown proportions. In turn this has resulted in an arms race of unknown substance. The potential value of planning defence modernisation, weapons procurement and an increase in production levels of indigenous production facilities over the next five years is put at US$ 150-200 billion.

This is without the projected financial support for diversification and conversion of military industries in the region, especially Egypt, Turkey and Israel. These changes in the most important arms market in the world will be of the utmost importance for Western exporter states and researches in the next years. The Middle East arms market has changed from a pure recipient of help and hardware to a diversified, highly technological industrial market with exciting opportunities for joint ventures, co-operation or import-export substitution. There will be the chance to develop independent market planning and market penetration plans, a role for which this report can fulfil its necessary function.

Information is necessary for market penetration, planning or marketing strategies. The Middle Eastern market is one of the most difficult to access. Traditional lines of communications, in combination with the involvement of third party influences have diffused the available channels to contact. State-oriented market strategies are not the only ways to approach the evolving Middle Eastern Markets. Independent or industrial agents have gained more influence in the decision making process in the last few years. The Al-Yamamah Project plus BAe in Saudi Arabia have proven to be a useful example of the involvement of external agents or family related intermediaries. This information will be of the utmost importance in the near future.

This Report will provide the available information on defence procurement mechanisms, political-military constellations, industrial-political relations and the process of military diversification, joint-venture formulation and modernisation in the next five years in the above countries. Information will be provided on conversion-projects of the indigenous defence industry or the 'set-off's' of defence contracts in the region.

Figures are Sipri trend-indicator values expressed in US $ millions at constant prices

Source: SIPRI Research Department, SIPRI Yearbook 1997, SIPRI Stockholm