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As Saudi Arabia goes on defense investment spree, Israeli industry in a tight spot

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As Saudi Arabia goes on defense investment spree, Israeli industry in a tight spot

Israeli firm Rafael scores a win with Spyder reportedly heading to UAE, but customers in Saudi Arabia remain out of reach.​

By ARIE EGOZIon September 23, 2022 at 1:29 PM
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DUBAI, UNITED ARAB EMIRATES – NOVEMBER 14: Boeing shows off model displays of their military equipment to a delegation from Saudi Arabia at the Dubai Airshow 2021 on November 14, 2021 in Dubai, United Arab Emirates. (Photo by Andrea DiCenzo/Getty Images)
TEL AVIV — Israel is facing a dilemma. Saudi Arabia is investing heavily in its defense industry, eyeing lucrative deals directly with foreign firms or that involve international partnerships.
But Jerusalem, which recently normalized relations with some Gulf nations but not the Kingdom, is being left out, much to the chagrin of some Israeli defense firms that haven’t been able to get permission from the defense ministry to sell their wares.
“The Saudis are very interested in Israeli systems,” a senior manager at one Israeli defense company told Breaking Defense on the condition of anonymity. “I’m sure there are ways to sell Israeli-made systems to Saudi Arabia even if some of the production is performed in [Saudi Arabia]. I know that the Saudis prefer some Israeli systems and this opportunity should not be missed.”
The consternation comes as Israel has seen cautious success with other Gulf nations, including the deal reported today to sell Rafael’s Spyder advanced air defenses to the United Arab Emirates. Israeli defense sources here said that would be a government-to-government deal, to be finalized soon.
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Saudi Arabia’s Vision 2030 plan includes localizing at least 50 percent of its defense spending, meant to stimulate indigenous production lines. But that offers opportunities for foreign firms to partner with Saudi firms, if they (and their governments) are comfortable with the arrangement. So far, the Israeli ministry of defense, which did not respond to a request for comment for this report, does not seem to be.
“I can understand the defense industries who identify a huge potential market, but this is seeing the picture through a straw. Only the ministry of defense sees the whole picture where Israeli interests are on top,” said Amos Gilead, a former major general in the Israeli military who served as head of the military intelligence research division. “Deals with Arab countries have been made and will be made, but each case should be evaluated very thoroughly by the ministry.”
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A senior military official told Breaking Defense he thought “there are ways to ensure that selling defense systems and even transferring production chunks to Saudi Arabia will not harm the security of Israel.”
In September 2020 Israel, the UAE and Bahrain signed the Abraham Accords, which formally normalized relations between the countries. Within months, those nations expressed interest in Israeli defense systems, as Breaking Defense has reported.
Such was the case with Rafael’s Spyder air defense system, long eyed by the UAE to boost its defenses against UAV incursion. The Spyder is a family of systems, working from short to long range to “defend large areas, as well as maneuvering forces, against a wide spectrum of threats, such as attack aircraft, helicopters, bombers, cruise missiles, UAVs and stand-off weapons,” according to Rafael. The details of what exactly the UAE is expected to get in the deal weren’t immediately available.
The general interest in Israeli systems has been shared by Saudi Arabia, and Qatar for that matter, but those nations still face high geopolitical hurdles.
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Israel isn’t the only country with which the Saudis are seeking to make deals as it attempts to continue to diversify its defense market. According to a report by the Oryx industry tracking site, Saudi Arabia has so far primarily purchased UCAVs from China. Since the mid-to-late 2010s, this has included the acquisition of a sizable number of Wing Loong I, Wing Loong II, and CH-4B aircraft. These added to a variety of reconnaissance UAVs produced in South Africa, Italy, and Germany that had been operating over Yemen since the start of the Saudi Arabian-led intervention in the nation in March 2015.
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In 2019, Saudi Arabia added to its arsenal of drones by purchasing the Lentatek Karayel-SU UCAV, which was developed in Turkey but would soon be produced in Saudi Arabia under the name Haboob.
Whether Israeli systems are the next to join the expansion, that remains to be seen.
 

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