Almost four years ago, Saudi Arabia established its Vision 2030: a plan to reduce the country’s dependence on oil by diversifying the economy. Development of a defense industry that could serve both the needs of the kingdom’s own military as well as those of allies has been key to that vision. Leading that effort is the General Authority for Military Industries, or GAMI.
Defense News spoke to Ahmed bin Abdulaziz Al-Ohali, governor of GAMI, to see how those efforts are progressing forward.
By 2020, Saudi Arabia expects to drive outcomes and maintain momentum to continue reforms, according to the vision. So what’s the state of progress?
GAMI Governor Ahmed bin Abdulaziz Al-Ohali spoke to Defense News about efforts to enable domestic manufacturing in the near term, which will be the foundation for Saudi Arabia’s long-term goals to ramp up export capabilities and co-development of military systems with global partners.
Saudi Arabia recently began accepting license applications for firms in the military industrial sector. Are there particular areas that GAMI hopes to fill in the portfolio?
We are focusing initially on 11 [categories], including unmanned aerial systems and air defense systems, land systems in terms of four-wheel drive and six-wheel drive [vehicles], and also ammunition. We believe we have covered the spectrum of forces in the land, air, marine and space domains.
GAMI and the Saudi Arabian Military Industries company, or SAMI, are major components of the Saudi Vision 2030. How significant is the role of military development under that broader vision?
We are an enabler of SAMI. We are entrusted in building a sustainable industry that should support our economy and national security and enable the ecosystem for local manufacturing that can bring in new technology and partner with foreign companies. SAMI is going to be one of the champions. But we hope in a few years to have more than SAMI.
With ambitious goals in terms of export, which countries do you anticipate will be key target customers? Where are the pockets of demand?
We haven’t even spent a second thinking about what would be the target. Our priority is to first build the capabilities. We need to build a trusted industry and capable industry. Once we build that, I can guarantee that many will like to be our customer.
Is there a specific schedule laid out to support export goals and broader ambitions under the 2030 plan?
The current focus is to build capabilities in Saudi Arabia. Currently we have very basic industry [capabilities]: ammunition, land [systems] and some weapons. We want to build bigger and more sophisticated platforms.
Export is on our agenda, but it’s not our priority at the moment. We have 10 years ahead of us in order to reach our target, which was set by the vision to reach about 50 percent local manufacturing of military capabilities. We believe it is a very ambitious goal, but achievable with cooperation internally and through global partners. Export is going to be a target toward the end of the decade.
How does the U.S fit into the vision?
Saudi Arabia and the U.S. have a long-standing and successful relationship in all aspects. We’ve been good allies in terms of fighting terrorism, global leadership and the energy sector. We have a close relationship with the big original equipment manufacturers, we have a good relationship with the [Pentagon]. We count on these to build a sound military industry. There is a precedent, and we feel comfortable and confident that the relationship will continue to flourish.
The United States and certain Western allies have various restrictions on exports of their own certain systems and technologies. Does this pose an opportunity for Saudi Arabia to meet an unfulfilled need among countries in the region and beyond?
Exporting military equipment is an essential long-term objective to sustain the industrial operations we are building, and regional markets will be a key target for that.
Our immediate focus is to achieve 50 percent localization of defense and security expenditure of the coming decade, and we will achieve that by developing of a world-class regulatory framework that promotes transparency and encourages industry investments, consolidation and optimization of benefit from military procurement and building national capacities and local research and development.
Counter to that, does it impede Saudi Arabia’s ability to grow development by cutting off access to certain technologies and systems from U.S. companies?
Saudi Arabia has strong relationships with many allies around the world, and I have personally witnessed through visits to my counterparts in several countries the high levels of interest in our plans to industrialize defense. I am confident that we will be able to pull off win-win agreements with many partners including U.S. companies to contribute to the development of local military manufacturing, industrialists and R&D.
Are there areas where U.S. export restrictions are a problem?
We haven’t faced any difficulties yet, though we would not be surprised if there would be future [issues] tied to intellectual property transfer. But this is among the challenges that we have to whittle down. We have strong relationships with many nations that are advanced in terms of their military. We’re keeping all options open.
Do you anticipate opportunities in the future for defense companies in Saudi Arabia to partner with U.S. companies on development or specific programs?
Absolutely. Development and innovation is a key pillar for GAMI. We cannot build a sustainable industry without a sound technology that comes with it. We will spend a great deal of resources and money and efforts on sound development. Saudi Arabia is way behind in industry and defense R&D spending. Our plan is to raise the spending level by 10 to 12 times by 2030. It will be our first desire to work closely with OEMs in development.
You expressed optimism about opportunities in the future for defense companies in Saudi Arabia to partner with U.S. companies on development or specific programs. How might this take shape? What does Saudi Arabia hope to receive in terms of support from the U.S.?
Our partners in the United States and other countries are adapting to a new norm in military transactions in Saudi Arabia and the rest of the region. They understand that sealing arms deals will require them to present ways of how they would support industry localization. Our Industrial Participation Program puts an excellent framework for these engagements and ensures that both parties are benefiting from military procurement deals. We will extend its support to OEMs who demonstrate commitment to defense industrialization in the kingdom through transfer of technology and development of local manufacturing capabilities and talent, while ensuring a solid IP governance and protection.
I know various partnerships have already been established with certain companies (Boeing, among others). What’s the ideal model of a partnership?
Like any other partnership, the ideal scenario is when both parties are rewarded for their commitment. Our job at the General Authority is to support OEMs who demonstrate commitment to defense industrialization in the kingdom through transfer of technology and development of local manufacturing capabilities and talent.
What needs to change in terms of procurement or export restrictions to better enable Saudi Arabia’s vision?
The global military industry has transformed considerably in the past decade, and we can see increasing openness toward collaboration and transfer of knowledge in the industry, also reflected in the growing number of global defense and security exhibitions and conferences. We believe this trend will continue, and we will continue developing regulations and policies that support the transfer of IP and technology to Saudi Arabia.
Saudi Arabia and the United Arab Emirates have each invested in efforts to grow domestic defense capabilities to support the region and enable export. Are there efforts for cooperation? Or do you anticipate this as more regional competition?
The UAE and Saudi Arabia have strong business, social and political ties. I foresee the desire of both countries to develop their local military industries as being another opportunity to collaborate, particularly in equipment and technologies of mutual interest.
Jill Aitoro is editor of Defense News. She is also executive editor of Sightline Media's Business-to-Government group, including Defense News, C4ISRNET, Federal Times and Fifth Domain. She brings over 15 years’ experience in editing and reporting on defense and federal programs, policy, procurement, and technology.
