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GCC arms itself
Thanks to regional tensions, the Middle East is the perfect market for western weapons manufacturers. Does Saudi’s huge US deal mark the start of some major investments from the GCC?
September 16, 2010 10:54 by Reuters
U.S. DRY SPELL OVER
Flush with petrodollars, the six countries of the Gulf, which also include Qatar and Oman, have unveiled plans to modernise their small armed forces.
As they work on strategies to improve cooperation of their small armed forces a joint military buying strategy would make sense, analysts say.
In total the Gulf countries could spend as much as $100 billion of which 60 percent would be for air defence and air forces, 25 percent for ground forces and 15 percent for navies, said John Sfakianakis, chief economist at Saudi Banque Fransi.
The Saudi deal — talks for it began in 2007 under the administration of former U.S. President George W. Bush — would end a recent relative dry spell for the U.S. arms industry in the kingdom, one of the world’s biggest arms buyers.
Although European firms have made inroads, such as Boeing rival EADS which won a border security contract worth more than $2 billion, European suppliers are likely to miss the bulk of a massive new wave of spending.
“I think the U.S. will get the lion’s share,” said John Sfakianakis, chief economist at Saudi bank Banque Saudi Fransi.
The Pentagon has yet to release details about this week’s planned agreement but officials said it was expected to include 84 new F-15 fighter jets and upgrades for another 70, plus 70 Boeing Apache attack helicopters.
Britain had hoped Riyadh might buy more Eurofighter Typhoons but this seems unlikely given the deal’s size.
“I don’t think the Saudis will need anything else in the next years,” said a Western diplomat in Riyadh.
That would leave European firms with a just a niche in border security or satellite systems.
France is in talks with Saudi Arabia on a satellite system to gather intelligence which could involve Thales and EADS, diplomats say.
(Reporting by Ulf Laessing; Editing by William Maclean)
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