• Saturday, November 17, 2018

Saudi Arabia Lays the Foundation for a Defense Industry of Its Own

Discussion in 'Arab Defence Forum' started by Jyotish Kailashkumar, Nov 10, 2018.

  1. Jyotish Kailashkumar

    Jyotish Kailashkumar FULL MEMBER

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    Saudi Arabia Lays the Foundation for a Defense Industry of Its Own

    Nov 9, 2018

    Highlights
    • Saudi Arabia has sought to lower its dependence on arms imports by building up its own defense industry, a process still in its infancy.
    • Saudi Arabia has also considered diversifying the sources of its arms and has looked to suppliers in countries such as Russia and China.
    • While the Saudis will make progress on building a defense industry that will provide economic benefits and increase their autonomy in the decade ahead, they will remain heavily dependent on their partnership with the United States.

    Editor's Note: This assessment is part of a series of analyses supporting Stratfor's upcoming 2019 Annual Forecast. These assessments are designed to provide more context and in-depth analysis on key developments in the coming year.

    Saudi Arabia, flush with money, nestled in a hostile environment and saddled with demographic shortcomings, has long spent freely to bring in weapons from abroad. And over the past five years, driven by its intensifying competition with archrival Iran and a heavy military commitment in the Yemen conflict, this trend has accelerated. During the period of 2013-17, the number of arms systems the Saudi government purchased grew by 255 percent compared with its acquisitions from 2008-12, ranking it behind only India among global arms importers, according to the Stockholm International Peace Research Institute.

    As Saudi Arabia pursues its regional interests, it has increasingly sought to insulate itself from outside influence. To guard against dependence on arms imports, which could subject it to political pressure, it has worked to build up the capabilities of its own defense industry. This shift in philosophy comes as the kingdom's usual arms suppliers increasingly reconsider the extent of their weapons trade with Riyadh because of mounting casualties from Yemen's civil war and outrage over the apparent murder of Saudi journalist Jamal Khashoggi. Besides lessening dependence on foreign weapons sources, a mature local defense industry could also play a key role in diversifying the Saudi economy while Riyadh is working to ease its overreliance on energy exports. If the Saudi defense sector can be successfully built out, it could provide jobs for a large number of citizens and help address concerns about growing unemployment.

    Building the Base for a Defense Industry

    Saudi aspirations for an indigenous defense industry are certainly ambitious. In its overarching Saudi Vision 2030 economic strategy, Riyadh wants to produce locally at least half of the equipment it will need for security and military use by 2030. To move toward that goal, when Saudi Arabia negotiates major arms contracts with trade partners, it increasingly insists that component manufacturing and final assembly be done in the kingdom.

    Riyadh has also overhauled some parts of the government structure to oversee the growth of its defense industry. For instance, the General Authority for Military Industries was created in 2017 to coordinate weapons procurement and research and development with an emphasis on local sourcing. In the same year, Saudi Arabian Military Industries (SAMI), a state-owned defense company with a focus on aeronautics, land weapons systems, missiles and defense electronics, all areas of heavy Saudi need, was founded. SAMI's lofty goals include the creation of more than 40,000 direct and 100,000 indirect jobs in the country by 2030, which, by then, it hopes would add more than $3.7 billion to the kingdom's annual gross domestic product, which stood at about $684 billion in 2017.

    [​IMG]

    Saudi Arabia already has made concrete progress in building its defense industrial base. Large Western defense companies employ thousands of Saudis at their plants in the kingdom. Two-thirds of the workers employed by BAE Systems to assemble the Hawk trainer jets it sold to Riyadh, for instance, are Saudi citizens. In March 2018, Boeing and SAMI formed a joint venture partnership with the goal of localizing 55 percent of the service and maintenance work done on Boeing aircraft sold to the kingdom by 2030. According to Boeing, this would create 6,000 jobs or training opportunities for Saudi youths.

    Wrinkles in the System

    While Saudi Arabia has certainly laid the groundwork for its defense industry and has made some early progress in developing it, guiding the sector to maturity will be no simple matter. It is one thing to agree on paper to significant technology transfers and local job creation, but it is another to effectively implement such deals. Struggles by defense companies to satisfy stipulations within pending agreements that mandate local sourcing of services and raw materials have led to contract delays. It has also proved particularly difficult for defense companies with well-established and staffed manufacturing plants in the United States and Europe to set up assembly lines in Saudi Arabia, despite the relative simplicity of assembly compared with full manufacturing.

    A particular problem those companies have run into has been in finding a sufficient number of Saudis who have both the necessary technical skills and the willingness to work on a factory floor. The shortcomings of the Saudi educational system have forced defense companies to conduct their own staff training, causing delays and adding costs. In fact, the choice of who would lead SAMI provides an illustrative point of the larger issue. Taking the helm as CEO of the state-owned defense company was not a Saudi, but rather Andreas Schwer, a German citizen and former head of combat systems at Rheinmetall AG.

    Moving Away From the U.S. and Europe

    Beyond the long-term strategy of making its own equipment, Saudi Arabia has also weighed the option of diversifying weapons purchases away from U.S. and European states, which currently satisfy the bulk of Saudi demand. Such an approach not only would allow Saudi Arabia to reduce its dependence on the United States and the European Union, but could also give Riyadh access to countries more willing to overlook its track record on human rights and to offer generous technology transfer rights as part of contracts. The kingdom, for instance, has opened negotiations with Russia over the purchase of the S-400 surface-to-air missile system in hopes that Moscow would offer a deal better than the U.S. offers on its Terminal High-Altitude Area Defense (THAAD) system. And Saudi Arabia has purchased large numbers of armed drones from China as the United States continues to refuse to sell such technology to countries in the region.

    While there are certainly potential benefits for the Saudis in diversifying arms sources, there are considerable limits as well. For one thing, neither Russia nor China is in the position to replace the United States as a present and powerful guarantor of Saudi security against Iran. Even more important, because the Saudi military is equipped chiefly with Western weapons, a major forcewide shift toward non-Western equipment would create serious logistical and training problems in a force already not well-known for its maintenance capabilities or its professional acumen. For those reasons, the Saudi state will have no choice but to continue to rely on its alliances with the United States and, to a lesser extent, European states. This will extend to its arms-purchasing relationship as well.

    Even in the best of cases, the Saudi defense industry will not be developed enough to give it full independence in weapons sourcing even by 2030. Considering the industry's current underdeveloped state, even if it matures considerably, the kingdom will still have to look abroad for the high-tech weaponry it desires. Saudi Arabia thus will have no choice but to continue to rely on arms imports in the coming years, but that dependence will not preclude it from following an increasingly independent course. Furthermore, given the limits of the kingdom's strategy to find other sources of weapons, Riyadh will remain keen to maintain its significant relationship with Western powers, particularly the United States.

    https://worldview.stratfor.com/article/saudi-arabia-defense-industry-weapons-imports-vision2030
     
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  2. omaromar

    omaromar FULL MEMBER

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    The KSA needs to industrialize the hell out of its defence industry. They have billions and billions of $$. Investing more in domestic production is a good step. They should be armed to the teeth and should have absolutely maximum deterrent!
     
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  3. Hakikat ve Hikmet

    Hakikat ve Hikmet SENIOR MEMBER

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    The KSA/GCC need to understand that they're the clear and present weakest links now!!! The previous ones have already perished!!!!! They need to extremely careful! All the Western equipment and westofixated officers failed to let the Last Shah of Iran come out intact from the "two weeks" notice served on them....
     
  4. omaromar

    omaromar FULL MEMBER

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    A country like the KSA should have had 500 nukes by now at the least. Without nukes no one is safe in today's world.

    What was the two-weeks notice about? Any details? What caused such a notice to exist in the first place?

    In retrospect the Shah of Iran should have known that if Musaddiq could be removed from power, so could he. He was a fool if he didn't realize that.
     
  5. Hakikat ve Hikmet

    Hakikat ve Hikmet SENIOR MEMBER

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    Hasn't President Trump elaborated it??
     
  6. omaromar

    omaromar FULL MEMBER

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    Ah I see now lol! How could have I forgotten about it.
     
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  7. The SC

    The SC ELITE MEMBER

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    And he got his answer ..clear and simple!

    You need a technology base for that..KSA did not have it at that time..so it has helped Pakistan to get its nuclear arsenal..it has poured in billions of dollars..

    [/QUOTE]What was the two-weeks notice about? Any details? What caused such a notice to exist in the first place?

    In retrospect the Shah of Iran should have known that if Musaddiq could be removed from power, so could he. He was a fool if he didn't realize that.[/QUOTE]
    It was big mouth talk to win some votes in the US mid-term elections.. but it was misplaced, hence MBS unequivocal answer in his interview with Bloomberg.._you can look up the thread about this subject_ here on PDF..