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29 March 2024

Capital braces for second post-crisis arms show

Published
By Nadim Kawach

Nearly 1,000 arms makers and other military and security companies from more than 60 countries will converge on Abu Dhabi in February for an international defence show, the second after the 2008 global fiscal crisis.

The February 20-24 international defence exhibition (IDEX), one of the largest ground and naval weapons shows in the world, is the tenth show to be hosted by Abu Dhabi and is expected to be the largest ever in terms of space.

The show is again expected to involve major arms deals for the UAE and other Gulf and Arab countries seeking to bolster their defences as part of a long-standing armament drive launched after the 1980-1988 Iraq-Iran war.

Despite the massive increase in public spending on development and other sectors to mitigate the effects of the crisis, regional nations are still lavishing heavy funds on armament and security related sectors.

Official data showed Arab nations pumped in excess of $500 billion into defence and security during 2002-2009 to emerge as the largest military spenders in the world relative to their total expenditure and gross domestic product.

“There has been a tremendous response to the marketing and sales campaign that is well underway for IDEX 2011, the 10th anniversary edition of the Middle East and North Africa’s largest defence show,” said the organizers, the Abu Dhabi National Exhibition Company (ADNEC).

“Major local and international players with stakes in the defense and security sector including Lockheed Martin, EADS, Saab and the UAE’s Offset Programme Bureau have already signed as IDEX 2011 exhibitors…. 26,500 square metres out of a total 36,000 square metres of indoor exhibit space has already been reserved more than 14 months in advance of the show.”

IDEX 2011 will showcase defence and security technology for land, sea and air operations and attracts national and international delegations, procurement officials, industry analysts and military strategists, besides the world’s leading defence contractors. At least 40,000 defence and civilian delegates are expected to come to the show, which is held every two years.

Key participants in the show include the UAE, Saudi Arabia, Egypt and other Arab countries besides such major weapons producers as the Untied States, Russia, Britain, France, Germany, China, the Netherlands, Spain, Turkey, Canada, Brazil, South Africa, Malaysia and Indonesia.

Experts believe Arab nations will keep defence spending high despite the crisis and the adverse impact of such expenditure on growth.Official figures showed the combined Arab budget allocations on defence security and justice have totalled around $550 billion during 2002-2009 and the bulk of such allocations have been made by Gulf oil producers.

Arab League figures showed member states have allocated more than eight per cent of the gross domestic product to defence and security over the past 10 years while such allocations accounted for as high as 28 per cent of their current expenditure and an average 20 per cent of their total spending.

The figures showed their cumulative expenditure totalled around $2.7 trillion during 2002-2009, including nearly $2.08 trillion in current spending, which has normally accounted for as high as 75 per cent of the total expenditure.

 “Arab defence spending has remained high even when oil prices were very low,” said an Abu Dhabi-based Arab diplomat. “I don’t think that any change in oil prices will affect this spending….this was illustrated in high defence and security allocations in budgets announced in 2009 by some countries in the region.”

The figures showed Gulf countries, which control nearly 45 per cent of the world’s recoverable oil deposits, accounted for the bulk of the region’s military and security spending, allocating more than $400 billion during 2002-2009.

While such massive defence allocations had smothered their economies and widened their fiscal deficits during the 1990s, they have had little impact over during the years that preceded the crisis due to the surge in their oil revenues.

The crude export revenues of the six Gulf Cooperation Council (GCC) countries during 2000-2009 were estimated at more than $one trillion, nearly triple their earnings in the previous seven-year period.

GCC states of Saudi Arabia, Kuwait, Bahrain, Qatar, Oman and the UAE have long been among the world’s biggest military spenders, allocating nearly a third of their current expenditure to the purchase of weapons and other military sectors, including maintenance, training and salaries to the armed forces.

Between 2000 and 2009, such allocations stood at an average 32 per cent of the current expenditure, which in turn accounted for nearly 78 per cent of their total spending, according to estimates by their governments.

The figures showed allocations for economic affairs in the Arab current expenditure were dwarfed by those for defence and security, averaging around eight per cent during that period. This means the cumulative funds earmarked for economic affairs within current spending totalled nearly $138 billion, below a third of the defence and security allocations.

Saudi Arabia, the world’s dominant oil power and largest Arab economy, has remained the top military spender in the region, traditionally allocating nearly 30 per cent of its total public expenditure to defence. In 2010, defence allocations accounted for around 31 per cent of total spending in 2010 but there was no reference to defence spending in the 2011 budget issued last week.

“Although not disclosed in the budget, we think that defense and security accounted for the largest component of government spending,” the Riyadh-based Jadwa Investments said in a study this week.

“Multi-billion dollar defense contracts were signed this year, but with payments to be spread over many years, the impact on spending in 2011 should not be too great. The pay rise for the military will push up defense and security spending,”