Procurement: The Price Of Freedom

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July 14, 2015: In early July Saudi and French officials met in France to approve a procurement deal worth over $12 billion. Among the items involved are two nuclear power plants, fifty Airbus airliners, dozens of helicopters, several patrol boats plus military aircraft and several other industrial items related to nuclear energy and nuclear technology in general. This is a continuation of something that has been going on for decades. For most of the last decade the Arab Persian Gulf states have altogether had annual arms averaging over $60 billion a year and most of it has gone to the six oil-rich members of the GCC (Gulf Cooperation Council). Saudi Arabia, the UAE, and Kuwait are the big buyers and the main reason for that is fear of Iran.

On the face of it all those purchases appear to be overkill because Iran must smuggle in its arms imports, as legitimate purchases are banned by international embargoes. Iranian military procurement is less than 10 percent of what their Arab neighbors are spending. But the Iranians have a long tradition of doing much with little when it comes to military equipment. In addition, the Arabs have a much less impressive combat record, especially in the last century. So the oil-rich Arabs are trying to equip their troops with a lot of the best stuff available and hope for the best.

The U.S. continues to be the leading arms exporter followed by Russia, France, Britain, China, Germany, and Italy. The sharp growth in arms exports is largely because in the past decade global defense spending has increased nearly 50 percent to over $1.4 trillion. That's about 2.5 percent of global GDP. After the Cold War ended in 1991, defense spending declined for a few years to under a trillion dollars a year. But by the end of the 1990s it was on the rise again. The region with the greatest growth has been the Middle East, where spending has increased 62 percent in the last decade. The region with the lowest growth (6 percent) was Western Europe. The 2008 recession had global defense spending stalled for a few years but then the spending growth has resumed in many parts of the world.

 

 


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