HelpUAE to hold steady on defense spending despite global turmoil
February 22nd, 2009 | IDEX 2009 | Posted by Pierre Tran
Abu Dhabi – A United Arab Emirates official rebutted rumors of a possible halving in defense spending due to the global economic crisis, as the IDEX arms show opened Feb. 22.
The UAE official dismissed exhibition rumors of plans to slash funding for existing programs. “There is no intention of cutting existing programs in view of the current financial situation,” the official said.
An executive of Safran group’s Sagem has said there was talk of a potential halving of the local military budget, while MBDA CEO Antoine Bouvier has said the first signs of a waning of defense interest had appeared a few weeks ago.
“Of course there have to be priorities,” the official said. “So far it’s OK, it’s manageable.” The authorities would keep the situation under continuous review. The government naturally recognizes there is a problem and is looking at how to deal with it.
A UAE-based analyst said the average price of oil in 2008 was above $90 a barrel, delivering a large surplus as the UAE needed $45 per barrel to balance the budget. The current oil price was around $30 per barrel, and the surplus could not last indefinitely. “The solution is not to throw money at the problem,” the analyst said.
In the present climate of financial fragility, the Gulf was a “buyer’s market, not a seller’s market, the analyst said. Anyone who comes with the old mentality will get a shock.
The UAE wants the best equipment for self defense, and wants to take an active part in research and development, the official said. The authorities are tough negotiators in seeking technology transfer, as shown by the demand for transfer of source code when the UAE bought the Lockheed Martin F-16 in the 1990s.
The U.S. government is extremely sensitive to technology controls, but the UAE insists on developing its own defense capability. Some of the technology transferred is at full NATO standard, the official said.
The U.S. Congress recently approved the $7 billion sale of the Theater High Altitude Air Defense system, the PAC-3 Patriot missile, and the latest C-7 version of the Raytheon advanced medium range air-to-air missile for the F-16 operated by the UAE air force.
The congressional clearances shows “the UAE is not a problem country,” the official said. The PAC-3 acquisition brings a measure of compatibility for the UAE as Kuwait operates the same version of the Patriot missile and Qatar is in talks for the same system. Saudi Arabia operates the earlier PAC-2 model.
The UAE had been concerned that Patriot was designed as a low level anti-aircraft weapon and had been adapted to an anti-missile mission. The UAE had considered buying a Russian air defense missile but the Americans had addressed the worries to allow a buy of the PAC-3.
Israel also has bought the PAC-3 version of Patriot.
Now that Congress has cleared the THAAD missile purchase, there would be detailed negotiations on how the UAE could take part in the development program.
There is a strong perception of threat from not just Iran, but the extensive transfers of weapons technology from Pakistan and India, fuelling the UAE’s determination to build up local defenses.
Foreign companies from America, China, Europe, Russia and other parts of the globe are here to sell arms into the Gulf region, but not everyone will get a share of the cake, the official said.
Tags: air defense, economy, IDEX 2009, missile, Procurement, spending, UAE
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