Turbulence in the Middle East and the implications for the defence trade

09 March 2011

By Guy Anderson

That political turbulence in the Middle East and North Africa will have some consequences for defence trade is almost self-evident.

Ministries across the region have found their attention diverted from procurement programmes to pressing operational issues, while efforts to placate popular concerns through far-reaching spending programmes already appear to be channelling government funding away from military procurement programmes in some quarters.

As an example, the government of Iraq was reported in late February to be shifting a USD900 million fund allocated to underpin the country’s F-16 Block 52 fighter aircraft programme: an accord valued at up to USD4.2 billion when it was last raised in September 2010.

Whether other governments follow suit remains to be seen, although the scale and abrupt nature of social programmes (such as Saudi Arabia’s announcement of a USD36 billion package to address inflation, housing, social security, employment and education concerns) suggests that military procurement in general may suffer delays and cancellation in the short term.

This alone is cause for concern, given that the leading markets of the region – Algeria, Egypt, Kuwait, Morocco, Oman, Saudi Arabia and the United Arab Emirates (UAE) – dedicated a total of USD30 billion to procurement in 2010 (according to Jane’s figures) and the Middle East is in the sights of the bulk of world materiel exporters as a means of offsetting decline elsewhere.

Potentially a bigger question is how the current upheaval will change the defence procurement landscape in the Middle East and North Africa, and whether lessons learnt today will change purchase patterns in the longer term.

Source: Jane’s

http://www.janes.com/news/defence/jdi/jdi110309_1_n.shtml

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