Home / Business News / Security Industry Mideast key focus of U.S. arms sales boom
Sept. 14, 2012 at 3:35 PM Follow @upi Comments
BEIRUT, Lebanon, Sept. 14 (UPI) -- Amid the rising tensions in the Middle East, with the United States locked in a Persian Gulf confrontation with Iran, the U.S. defense industry tripled its global arms sales to a record $66 billion in 2011. Half of that went to Saudi Arabia to counter the Islamic Republic.
A recent report by the U.S. Congressional Research Service said the 2011 figure, amounting to nearly 78 percent of all global arms sales constituted an "extraordinary increase" over the 2010 U.S arms sales total of $21.4 billion.
The study by CRS, a division of the Library of Congress, is considered the most detailed overview of unclassified global arms deals available to the general public. The report cautions that the international arms market is shrinking because of a weaker global economy and major defense spending cutbacks by the United States and its European allies.
This has meant that the defense industries in the United States and Europe and to a lesser extent those in Russia and China, have come to rely on exports to maintain production lines for weapons systems used by their national military forces.
These cutbacks obviously have a knock-on effect that further undercuts the economies concerned.
Bear in mind, too, that arms sales aren't the same thing as arms delivered, a process that can take five or six years.
But it is clear that arms sales have increasingly become a vital element of maintaining economic stability to the United States and other industrialized nations.
"Europe's combat aircraft industry faces an uncertain future," the International Institute for Strategic Studies in London reported in a Sept. 7 analysis, while the stealthy F-35 Joint Strike Fighter is the combat jet of choice for most air forces, including Israel's.
"While Europe still has several types of fighter aircraft in production, there is no new European-developed manned combat aircraft currently in prospect and the outlook for the development and production of unmanned air systems is also unclear," the ISS said.
"Any future aircraft programs and collaborations will reflect the continuing scaling down of capabilities and ambitions by European countries."
High oil prices, and burgeoning fears about Iran's growing isolation because of U.S and European economic sanctions over its nuclear program, are likely to ensure that the Saudis and their five partners in the Gulf Cooperation Council -- the United Arab Emirates, Kuwait, Qatar, Oman and Bahrain -- have funds for large-scale defense procurement.
But by all accounts they've already signed up for most of their most important military requirements, air-defense missile systems, advanced combat aircraft, new warships and armor.
The Saudi deals embrace a multitude of weapons systems and advanced military technology, such as command-and-control systems for battlefield management as well as radar and communications systems.
So major arms purchases from the GCC may be few and far between in the next few years.
Even so, Forecast International, a market intelligence and analysis firm in the United States, observed in February that the GCC, as well as other Arab states, is expected to spend $385 billion on its defense and security forces over the next four years.
To what extent that remains true isn't clear but there appears to be a steady stream of lucrative contracts for upgrades and high-tech support services that the Arab states cannot provide themselves.
This, in turn, is likely to intensify the competition within and between the U.S. and European defense establishments, for Middle Eastern contracts.
Germany, for instance, is easing its long-held restrictions on arms sales to conflict zones, to sell arms to Arab states, largely out of economic necessity. These include two Type-209 diesel-electric submarines to Egypt and 600-800 Leopard tanks to Saudi Arabia worth up to $12.6 billion.
In July, Turkey signed a $2.5 billion deal with a German consortium for six U-214 submarines.
The alternative is mergers, including trans-Atlantic combines. One project under way, a tie-in between the European Aeronautic Defense and Space Co. and Britain's BAE Systems could provide a template for such arrangements.
A merger like that would pose a major challenge to Boeing, the leading U.S. aerospace contractor.
BAE, Britain's largest defense company and a key supplier to Saudi Arabia, has a major presence in the United States. In 2011, the United States accounted for more than 40 percent of BAE's $31 billion income.
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