In This Article:
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The United Arab Emirates announces about $1.35 billion in defense deals with local and international companies.
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While just under $1.1 billion of that is going to international firms, the UAE is setting its sights on building a domestic defense industry as arms spending is set to soar throughout the region.
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Ian Bremmer, founder of political risk consultancy Eurasia Group, told CNBC on Sunday: "I think there is an arms race happening in the Middle East."
The United Arab Emirates announced about $1.35 billion in defense deals with local and international companies on the opening day of IDEX 2019, the International Defence Exhibition and Conference, in on Sunday.
Of the 33 deals announced Sunday, 18 were domestic and 15 were with foreign firms, the latter accounting for just under $1.1 billion of the total, an IDEX spokesperson said during a news conference.
American companies took the greatest share of foreign sales, at about $490 million. Led by Raytheon RTN , Lockheed Martin LMT and Hesco, the deals will provide missiles, new radar systems capabilities and defensive shelters for the UAE military, respectively. Others notching sales to the country included France's Thales HO-FR , Australian firm EOS Defense EOS-AU and Germany's Rheinmetall Electronics. RHM-DE
The deals with 18 domestic firms highlight the small Gulf country's investment in developing its own defense manufacturing industry as part of a drive to diversify its economy away from oil.
Soaring regional defense spending
The purchases come at a time when defense spending is soaring in the Middle East. A report from IHS Jane's published Friday revealed an increase in arms expenditures in the Gulf from $82.3 billion in 2013 to $103 billion in 2019. And it's showing no signs of stopping — IHS forecast spending will hit $110.8 billion in 2023.
While the drop in oil prices from 2014 to 2016 delayed many procurement projects, "defense was generally protected from the worst of the spending cuts due to regional security concerns and budgets are now growing again," Charles Forrester, senior defense industry analyst IHS Jane's, wrote in the report.
The heavy spending is no surprise given the ramp-up in political tensions over the last few years between regional rivals Saudi Arabia — along with its Gulf allies the UAE and Bahrain , among others — and Iran . The Saudi-led blockade against Qatar has also spiked arms procurement, as the latter's resulting re-armament made it the world's eighth-largest weapons importer in 2018, IHS said.