Key points

• As a result of the war between Russia and Ukraine, global defence
  spending is on the rise. NATO member states in particular are
  increasing their military budgets substantially. This gives momentum to
  the global arms industry, which showcased its newest capabilities over
  the course of the five-day IDEX exhibition on 20-24 February 2023 in
  Abu Dhabi, United Arab Emirates (UAE).
• At IDEX 2023 the countries with the two largest economies in the
  Arabian Gulf region, the UAE and Saudi Arabia, stood out as the
  major customers of defence contracts. The UAE signed more than 50
  agreements totalling US$6.3 billion, US$5.9 billion of which were signed
  with Emirati defence firms. The procurement of locally made defence
  weaponry allows the UAE government to continue its economic
  diversification policy and preparations for the post-oil era. It also
  decreases its reliance on Western security guarantees, especially as US
  foreign policy shifts its attention from the Middle East towards the US
  strategic competition with China.
• Like the UAE, Saudi Arabia is looking to advance its indigenous defence
  industries. In line with its Vision 2030 goals, the country plans to
  localise more than 50% of its military spending by 2030.
• Prior to the Iran-Saudi rapprochement in March 2023, instability in
  the Middle East – mainly perceived Iranian aggression and its support
  of regional proxies – served as the main driver behind Saudi Arabia’s
  military spending. Although Iran and Saudi Arabia recently agreed to
  reinstate diplomatic relations following years of hostilities, deep mutual
  distrust between the two states is likely to remain.
• US Defense Secretary Lloyd Austin recently recognised climate
  change as a destabilising force and “existential threat” to US national
  security. As the UAE prepares to host the UN COP 28 climate summit in
  November 2023, his point is a timely reminder that defence industries
  must adapt accordingly and develop innovative and sustainable
  solutions that meet the strict equipment performance requirements
  defence ministries rely on.