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UAE’s Defence Industry Explained

UAE’s Defence Industry Explained

Defense Spending

UAE has been investing a lot in the defence industry for the last few years to achieve its strategic interest and gain economic benefits. UAE is one of the top 15 defense spenders in the world, according to the business monitor International (BMI). According to the Stockholm International Peace Research Institute, it was also the 5th largest arms importer between the periods 2009 to 2018. UAE is the significant importer of military assets, and the doors of UAE are opened for all the suppliers. Still, the government is working to end the dependency on defense imports by developing and increasing the defense equipment manufacturing capabilities of the country.


Rise of UAE Defence Industry:

Most of today’s arms producer’s countries started their industries during the cold war with the help of U.S. firms looking to buy consumer and political support. However, the Iraqi invasion of Kuwait in 1990 and the U.S. invasion of Iraq in 2003 made the UAE interested in making weapons. These wars made the Gulf countries realize that in order to counter such a threat, they had to be strong and self-reliant. Therefore, they signed deals with foreign defense companies to start investing in their industries, and UAE was the top country. However, the UAE approach was a bit different in these deals.

An agreement known as an “offset” says that the defense contractors cannot only sell a weapon, but they will also have to pay for infrastructure around it. It depends on the buying company whether they ask the selling company to invest in real estate, universities, industrial parks, or factories. In 1997, the U.S. Department of Commerce advised the governments to manage the offsets through investment funds because the price tags got high. The UAE was the only country that followed it. The offset bureau of UAE helped it to establish two sovereign wealth funds: Tawazun and Mubadala.


The Tawazun Economic Program:

This is the UAE program, which seeks to capitalize on the country’s extensive defense procurements. The Tawazun Economic Council oversees this program. The objectives of this program are to develop the defense sector, create economic knowledge, diversify the economy, create opportunities for the private sector, do high-value exports, and create employment opportunities in UAE for its nationals, especially in high-tech fields. In 2019, Tawazun issued the guidelines, in which it was stated that the central focus of the Tazun would be on the development of the defense and security industry but in addition to that, it will also work on strategic projects like aerospace, infrastructure, and transportation, communication technology, environment, and climate change, education technology, and food and water security. Furthermore, in 2020, Tawazun announced that two business lines, advanced pyrotechnics and Alhosan armored systems, would be established.

Advanced pyrotechnics would focus on manufacturing non-lethal ammunition whereas, Alhosan armored system would focus on producing personal protective gear. In 2014, UAE brought together the Tawazun and Mubadala funds under the Emirates defense industries company, merging with many other subsidiaries in 2019 to form the defense combination. Its CEO somehow managed a $ 5billion budget to develop a sovereign capability. In other words, that means partnering with the big foreign defense company, buying out the small company, and hiring the middle ones to open a shop registered under a local name in Abu Dhabi. As the property would be belonging to the UAE, export control limiting the exchange of technological know-how would not be applicable.


Cooperation Between the U.S. and the UAE:

In the late 1990s, the commerce department’s bureau of industry and security turned against its advice because of corruption risk in that practice. Nevertheless, their words did not affect much. During the 1990s, the arms race between the U.S. and the soviet petered out, and the United States started to cut off the budget of those who monitored these kinds of deals. The UAE’s ruler Mohammed bin Zayed and its deputy commander somehow managed to push deals through because they had friends in the lobbying circles.

However, offsets still had their limits, and they were known to be slow and rarely completed. The UAE set rules to squeeze most of them but was too annoyed to build military infrastructure from the ground up. Despite that, by scaling up its investment funds, it has been spending money to bring the foreign projects and their engineers to Abu Dhabi. The U.S. and UAE signed a cooperation agreement in 2019, which could be called the updated version of the 1994 defense accord. The agreement was supposed to increase the military to military cooperation between the UAE and U.S. In the agreement, it was also decided that the U.S. would provide the troops and equipment to help the UAE in critical times. Currently, there is 5,000 US military personnel stationed in the UAE.


UAE and Saudi Arabia Cooperation:

In recent times, UAE and Saudi Arabia have been making great efforts to increase their military capabilities. There are two main reasons behind this. First is, when the oil prices fell in 2014, the government tried to find other ways than oil to diversify their economies. Therefore, building the military industry was the best option because it creates jobs and supports long-term economic development. That is why developing and strengthening the local defense companies was the prominent feature of the Saudi Vision 2030 and Abu Dhabi Economic Vision 2030. Secondly, baking the sustaining defense industrial base allows the small states to make an autonomous strategy because it decreases their reliance on foreign arms.

On Feb 17, 2019, at Abu Dhabi’s International Defence Exhibition (IDEX), the emirate company Calduis signed an agreement with the Saudi-based aerospace and Defence Company known as GDC Middle East to export its B-250 light attack aircraft to the other countries in the region. This project worked as an impetus to strengthen the UAE and Saudi Arabia’s domestic defense industry. Generally, when the arms are sold to the Gulf countries, they are done with the requirements known as offset clauses to ensure that the contractors support the local economy by giving employment to the local labor force.


UAE’s Other Partnerships:

Lockheed Martin also partnered to make a machining center in UAE with Exechon, Sweden-based, and Injaz National, Abu Dhabi, based. Moreover, Canadian Wescan also announced its partnership with ADASI and said they would open a center in UAE in the maintenance and repairing of imaging and targeting systems. Furthermore, the Indian reliance defense limited also signed a cooperation memorandum of understanding with EDIC.


The Success of the UAE Defence Industry:

UAE has achieved significant successes in its defense industry through the investment of TEC, such as the creation of the Advanced Military Maintenance Repair and Overhaul Center (AMMROC). AMMROC primarily focused on the UAE air force, and it has elevated its ambitions. For example, in Jan 2019, it exhibited the new weaponized version of the Sikorsky UH-60 Black Hawk helicopter. In the UAE’s sovereign defense industry, there have been many foreigners and fewer native workers. Nevertheless, it does not matter what nationality people work in the UAE defense sector; what matters more is that the UAE owns, assembles, maintains, and serves a growing share of technologies it uses.

In 1996, Abu Dhabi Ship Building (ADSB) was created, which focuses on naval repair and refits. Later, the company broadened its expertise in shipbuilding, and in the 2000sm, it built six Baynunah-class corvettes. The ADSB has exported landing craft to countries like Oman, Bahrain, and Kuwait in recent years. The success of UAE-based defense companies like ADSB and AMMROC is the hope that it could make the UAE a good weapon exporter and diversify its economy through the weapon. Beyond the economic prospects, it is observed that the defense industry is a vital tool for UAE’s foreign policy.

UAE kept its arsenal confidential, but the Yemen war offered a preview. In 2015, the blockade of Hodeida port was caused by the Baynunah Corvette, which is a small warship manufactured at Abu Dhabi Shipbuilding. The war also revealed UAE’s branded missiles, drones, machine guns, and armored vehicles. These weapons were not the best, but enough to deter the enemy in battle. Now those weapons are advertised and are on the market for export. In the last decade, UAE started to reform and reorganize its defense industry. In 2014, it integrated many small firms into the Emirates Defence Industries Company (EDIC), the largest arms manufacturing and services provider. In addition to EDIC, Tawazun Economic Council (TEC) has played a vital role in financing local industrial initiatives. In Feb 2019, TEC announced creating a defense and security Development Fund with a starting capital of $ 690million.

UAE has invested a lot in the EDGE group, which was formed in 2019. In the EDGE group, 25 entities are involved, including emirates defense industries company (EDIC), emirates advanced investment Group (EAIG), Tawazun Holding, etc. The revenue of the EDGE group is above $ 5billion, and it has 12000 employees working in mainly five verticals: platforms and systems, missiles and weapons, cyber defense, intelligence, mission support, and electronic warfare. At an international defense exhibition and conference (IDEX) in 2019, UAE signed many contracts worth an estimated $ 4.5billion. Most of these contracts were given to the domestic manufactures so that the defense Industry of UAE grows.

No gulf countries have been able to compete with the UAE in the defense industry. Saudi Arabia has tried to compete with the UAE but is nowhere near the UAE’s exports and innovation. Saudi targets to localize up to half of its military industry by 2020, but it seems like it cannot achieve its target. It puts most of its money in joint projects rather than research and training programs that could only help him localize its military.


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