Middle Eastern Defense Market Blooming
LONDON — The defense market in the Middle East is set to grow over the next decade as countries in the region make key acquisitions of ships, vehicles and missiles, said one expert Sept. 16.
“From a Middle Eastern perspective, we see that that market will start to rise over the next decade,” said Ben Moores, a senior analyst with IHS Aerospace and Defence.
The defense market in the Middle East is one of the largest and fastest growing globally, especially as militaries in the United States and Western Europe pare back spending, he said during the Defence and Security Equipment International conference.
A number of factors — from social change, economic transformation, global power shifts, religious tensions, regional conflicts and demographic challenges — are fueling this growth, he noted.
“I believe the current conflicts will go for a very long time and will continue to mutate,” Moores said. “This is going to have a tremendous impact on defense spending and defense procurement. You’re going to see very large shifts and a shift toward maybe more urgent operational requirements as the conflict mutates and evolves.”
There will be significant opportunities for defense contractors to sell to these nations, with six out of 10 of the fastest growing markets being located in the Middle Eastern region. “Out of the six fastest growing markets, there are $150 billion worth of opportunities in the Middle East over the next decade,” he said.
Qatar, Kuwait, Algeria and Saudi Arabia are all countries prepared to make large acquisitions, he said. Over the next 10 years, the ship, vehicle and missile market will be “absolutely crucial for the region,” Moores added.
For missiles, that market could triple over the next decade. Right now, Raytheon and MBDA dominate the playing field, but that could change, he noted.
“Last year Turkey awarded a contract to China for a ballistic missile defense system which is a major deal. Now that deal hasn’t yet gone through — it appears to have been canceled — but the fact that it was awarded once is very significant,” he said. “I think it points to the fact that this market could shift.”
There are some $11 billion in opportunities for missiles, especially air-to-air and anti-shipping missiles. Algeria will be a key country for the missile market, he said.
“Algeria is going to have very large requirements for anti-ship missiles, mid-range air-to-air and long-range strike,” he said.
New ships are also needed in the region, especially in Saudi Arabia. Kuwait, Qatar and Saudi Arabia will make investments in patrol boats. Saudi Arabia, the United Arab Emirates and Qatar will purchase corvette warships, he said.
Military vehicles will be extremely important to the region, but it is expected that the market will decline overall, Moores said.
“We think that’s because countries are going to be looking at lighter vehicles — we think they are going to be moving away from heavier vehicles,” he said. “We think they will also be spending more on mission systems rather than the actual platforms.”
Oil is the primary funder of defense spending in the region, but falling prices will affect countries differently, he noted. Most countries have little debt so spending can continue as normal. For Morocco and Egypt, falling oil prices will be a boon but it will hurt Iran and Algeria, Moores said.