WASHINGTON — Concerns about the Islamic State group, Iran's growing influence and Yemen's upheaval are boosting the regional defense market's land sector ahead of the massive International Defense Exhibition (IDEX) in Abu Dhabi, analysts said.
Playing into the rivalry between the Arabian Peninsula states and Iran, Yemen's Houthi takeover has stoked deep fears of a radical Shiite front, analysts said. Meanwhile, these states fear the Islamic State group, also called known as as ISIS, ISIL or Daesh, may expand or at least influence groups in Saudi Arabia, Yemen and Turkey.
The geopolitics add up to a bullish environment at IDEX for capabilities used by land forces: ground vehicles, rotorcraft, and surveillance and reconnaissance technologies, analysts said. The sector may be slumping after years of expansion in the US, but the Mideast, "is still a good place to do business," said Aleksandar Jovovic, principal for aerospace and defense consulting firm Avascent.
Digital Show Daily: Complete coverage from IDEX 2015
"We don't see any major changes, but if anything, ISIS and Syria have accelerated investment in this space," Jovovic said.
For 2015, Avascent expects Mideast and North Africa land combat equipment spending to hit US $8.4 billion, with solid growth in 2016 as well. (Its market forecast excludes Iran.)
While the threat of Iran generally fuels the maritime, missile and aviation sectors, conventional threats and internal security issues are driving the land sector. ISIS represents a counterinsurgency and conventional threat, as it is armed with battle tanks, vehicles and other assets captured from Iraqi and Syrian forces.
"Certainly ISIS is a threat for all of the countries that border Syria or Iraq," Jovovic said. "Because of ISIS, because of the Houthi in the south, there is a lot of emphasis on ground combat, and that is tactical, logistical and attack aircraft."
Beyond vehicles, and if the US is a guide, the conflict is fueling spending on anti-armor and anti-tank missiles, such as the Javelin, which are going into the region, according to Jovovic. There has also been investment in rotorcraft in the region to meet a need for "punch, but also agility," for a hybrid foe like ISIS.
In the Mideast, Jovovic sees a growing emphasis on wheeled vehicles, which are faster, cheaper and easier to maintain than tracked vehicles. In this area, Algeria recently purchased 1,000 armored personnel carriers from Germany's military company Rheinmetall Defence, and historically, Russia has supplied Algeria with the T-90 battle tank.
The region's market for Humvees, mine-resistant, ambush-protected MRAPs trucks and logistics vehicles — and their upkeep — remains competitive among players from North America, Europe and smaller markets. A year ago, One large move in this area is Saudi Arabia's signed a $10 billion deal, signed a year ago with General Dynamics Land Systems - Canada for light armored vehicles, Canada's biggest deal.
There's been a significant amount of investment in mine protected vehicles and some of that is expected to shift to six-by-six and eight-by-eight combat vehicles.
"It's a similar trend to the US; we're keeping some of our inventory and shedding some of it," Jovovic said.
Saudi Arabia is reportedly in the middle of upgrading its fleet of 300 tanks. But according to Imad Harb, of Quest for Middle East Analysis, and a distinguished international affairs fellow with the National Council on US-Arab Relations, Saudi Arabia probably does not need to buy any more. of them.
"They are are armed to the hilt with tanks, they're tanked up, I believe," Harb said of Saudi Arabia. "They Saudis and Emiratis have very modern equipment, they have been on the market for a long time, and they know what's good for them. ...Their land forces are very, very well equipped."
Otherwise, Saudi Arabia in particular is focused on securing its southern border with Yemen, which it deems a failed state and a security vacuum, according to Harb. The Arabian Peninsula states, after sending billions in aid to a friendly government in Yemen, have seen that government unseated by the Shia Houthi movement.
That in turn will fuel an interest in UAVs unmanned aerial vehicles for intelligence, surveillance and reconnaissance, whose presence at IDEX has surged in recent years. Jovovic predicts greater interest in UAV integration into more integration of UAVs into land combat operations, both for ISR and offensive operations. This could offer an on the attack— anopening for players other than the US, which will not share its most sophisticated technology.
"A lot of militaries in the region are not frankly at the forefront of that yet, but I think they're going to do more of that, so we'll see how successful that is," Jovovic said. "Is there some use for troop or equipment transport, something like that?"
Countries will be in the market for more sophisticated communications for new vehicles and upgrades, beyond two-way radios, Jovovic said. As forces in the region train or operate alongside the US, it fuels a desire to emulate their big ally and seek technologies like the blue-force tracking gear US troops have.
One observer of the growing arms activity in the region questions whether this militarized response is a wise choice. Arms purchases of all sorts are active in the region, particularly as countries beef up their border security programs, and Iran remains a key driver for defense spending. But is are these nations on the wisest course?
According to Pieter Wezeman, a senior researcher for the Stockholm International Peace Research Institute's (SIPRI) arms reduction and control program, the regional arms race, as driven by fears of Iran, is unwarranted and unhelpful.
"We see how they see Iran as a threat and have the clear perception that they have to arm themselves to the teeth to make sure Iran doesn't have an opportunity to be a threat, that Iran can't enhance its power base in the region," he said.
Yet, according to Wezeman, the buildup of conventional weapons, which the Arabian Peninsula states already have in abundance, only encourages incentivizes Iran to pursue alternatives.
"There is a mutual distrust, and by feeding these countries with weapons, and not trying to convince them of arms control," Wezeman said, "you really risk the situation coming out of hand."
Email: jgould@defensenews.com
Twitter: @reporterjoe
Joe Gould was the senior Pentagon reporter for Defense News, covering the intersection of national security policy, politics and the defense industry. He had previously served as Congress reporter.
