By Rob L. Wagner
15 May 2016
JEDDAH – The road to a sustainable arms industry in Saudi Arabia is expected to be a long and difficult slog with the likelihood of the kingdom achieving modest incremental success but possibly failing to realise a true industrial base within 15 years.
In his road map for a new Saudi Arabia with a diversified economy not dependent on oil revenue, Deputy Crown Prince Mohammed bin Salman bin Adulaziz laid out his vision of directing as much as 50% of the kingdom’s military purchases to local industry.
Saudi Arabia is the third largest military spender in the world, yet beyond some small manufacturing plants it has no military industrial base. The country’s defence spending in 2015 grew to $87.2 billion, an increase of 5.7% over the previous year, according to the Stockholm International Peace Research Institute.
“We spend more on military than the [British], more than France, and we do not even have a local military industry,” Mohammed said in a recent interview with Al Arabiya, noting that only 2% of Saudi military purchases are directed to local manufacturing.
“We have a strong demand inside the kingdom for the development of a localised military industry. If we raise the local industry purchases to between 30% and 50%, we will be able to develop a new massive industry, which will boost the economy largely and create many jobs.”
Saudi Arabia’s ambitious plan has been met with scepticism from Western military analysts and cautious optimism from Saudi observers.
Kenneth M. Pollack, senior fellow for foreign policy at the Brookings Institution’s Center for Middle East Policy in Washington said a vibrant arms industry would be elusive for Saudi Arabia.
“Saudi Arabia has no capacity to build an arms industry,” Pollack said. “Could they start out doing pieces of production and it might lead to something more substantial? Sure they could but they must start modest before doing something more sophisticated.”
Pollack said Saudis are missing two key elements in building an arms industry: a sophisticated industrial base and an educated labour force.
Pollack said a look at Egypt’s military-industrial base could be a window to Saudi Arabia’s future, noting that Egypt requires in its military contracts that sellers provide help in developing an industrial base.
“The United States technically has plants in Egypt but all they do is assemble tanks from kits,” Pollack said. “It certainly creates jobs for Egyptians and gives workers a certain amount of sophistication but it adds very little to the local economy.”
Japan and South Korea have built true industrial military bases that have taken decades to achieve, he said. “Japan builds tanks that are pretty darn good,” Pollack said.
One Saudi political analyst, who spoke on the condition of anonymity, said it does not matter. “If we can accomplish even 10% of what the prince wants, then we have succeeded. We have to start somewhere,” the analyst said.
The issue facing Saudi Arabia is whether creating jobs is the only goal. This can be accomplished by Saudis aggressively pursuing their offset obligations, which have been underutilised, by demanding foreign arms manufacturers provide jobs and training associated with their products. The alternative is to establish an industrial base capable of manufacturing weaponry that provides jobs and also helps protect the kingdom and generate revenue by exporting military hardware to its neighbours in an increasingly unstable region.
“I am not one of those who envision Saudi Arabia as a major military power,” said Ehsan M. Ahrari, an independent defence and foreign affairs consultant and chief executive officer of Strategic Paradigms in Alexandria, Virginia. “The fighting spirit… is virtually absent from the military of the Gulf States.”
Although there is little doubt that Saudi Arabia wants to create jobs and, indeed, lacks an educated workforce ready to tackle building a military industry, the Saudi analyst said the need for educated workers to help build a thriving base is overstated.
“There are nearly 200,000 Saudis studying for their graduate and postgraduate degrees abroad,” the analyst said. “When they come home they will need jobs. If we were to build a military industry, we will need high-level and mid-level managers. That’s not a huge number of workers and can be easily filled. The remaining workforce — and that involves thousands of jobs — doesn’t need a university education.”
If the Saudi government envisions a sustainable military industrial base by 2030, then Iran’s arms industry may be a good reference point. Following the 1979 Islamic revolution, an international arms embargo forced the Iranian government to develop its own arms industry. Although Iran’s industry is not particularly sophisticated, it produces its armoured personnel carriers, tanks and missiles and exports weapons to nearly 60 countries.
“Iran has been developing its own arms industry for 30 years and it gives you a sense of what time requirements are involved,” Pollack said.
