ABU DHABI—Facing a host of military threats, the oil-rich monarchies of the Persian Gulf have been boosting outlays for defense equipment—providing a shot in the arm for Western arms suppliers facing government cutbacks in much of the rest of the world.
Lower oil prices may eventually damp the buying binge, as they did during a price slump in 1999. But for now, weapon sales to Middle East buyers, chief among them Saudi Arabia, are booming.
Riyadh spent $80.8 billion on defense last year, up almost 43% from just two years earlier and trailing only the U.S. and China, according to the International Institute for Strategic Studies. The four biggest Persian Gulf defense customers—Saudi Arabia, the United Arab Emirates, Oman and Qatar—spent a total $109.9 billion in 2014, up from almost 44% from 2012.
Fueling demand from the Arab monarchies are new military challenges in the region, including the threat posed byIslamic State and other militant groups, and continuing concerns about Iran’s regional ambitions.
“The pressure to spend is much higher than it was in the late 1990s,” said Pieter Wezeman, a senior researcher at the Stockholm International Peace Research Institute. Middle East countries “see so many different threats coming from so many directions,” he said.
Advertisement
Jordan and Bahrain, as well as the U.A.E., Qatar, and Saudi Arabia, have conducted airstrikes against Islamic State positions in Syria, sometimes in partnership with U.S. forces. Egypt recently joined the fray, sending war planes against Islamic State elements in Libya, after a video purported to show the execution of more than a dozen Egyptians by the group there.
Executives from U.S. and European defense contractors, as well as competitors such as China National Aero-Technology Import & Export Corp., and Brazil’s Embraer SA, are gathering in Abu Dhabi this weekend to show off their wares at the International Defence & Exhibition Conference, a U.A.E. trade show that has grown in importance in recent years as Mideast buyers open their wallets.
The new threats have piqued interest in equipment beyond the usual shopping list of fighter jets, tanks and guns. Mideast customers are looking for ways to counter Internet-savvy militants, or track groups’ disparate factions on the ground. They are also buying more sophisticated antimissile systems to counter Iran.
Last year, Saudi Arabia put in an order for as many as eight Spydr aircraft, a relatively small spy plane made by L-3 Communications Holding Inc. The U.S. used a similar system in Afghanistan to track Taliban insurgents and find roadside bombs.
“The demand for that platform in the region is great given what’s going on,” said Michael T. Strianese , chief executive of New York-based L-3.
Interest in cybersecurity tools and domestic security equipment also is rising as states look to counter insurgent threats. European aviation and defense giant Airbus Group NV said last month it won a contract from Lebanon’s interior ministry for a secure radio system for one of the country’s intelligence agencies.
“The cyberthreat is real and growing,” said Danny E. Sebright, president of the U.A.E.-U.S. Business Council and a former U.S. Defense Department official. “Key Middle East countries are working feverishly to better protect themselves in the future.”
For many Mideast buyers, the drop in the price of oil could moderate their appetite.
