Saudi seeking to beef up domestic weapons industry

Saudi Arabia is planning on beefing up its domestic defence industry as part of a move to diversify from oil. The plan may see the creation of new jobs and the development of new technology as Mohamed Bin Salman, the Crown Prince, tries to find a solution to the Kingdom’s youth unemployment and its increasing demand for weapons.

While Saudi is the fourth largest military spender in the world, it splurges more than anyone else on arms in terms of its Gross Domestic Product; with 10.4 per cent allocated for weapons purchase only Russia comes closest (5.3 per cent) while the US is third with 3.3 per cent.

Bin Salman sees the challenges of the Kingdom as an opportunity. “We spend between $50 billion and $70 billion annually on the military. We are the world’s third-largest spender on arms, and 99 per cent of that goes outside the kingdom,” the crown prince was reported to have said by the Financial Times. “This is a huge opportunity to create Saudi-based industries and jobs.”

The ambitious plan will see state-backed Saudi Arabian Military Industries. The Kingdom has also set up the General Authority for Military Industries, which is a government body with broad powers in military procurement as well as research and development.

According to the FT, companies such as the UK’s BAE Systems have for decades been expanding their training and manufacturing activities in the Kingdom. BAE employs 6,000 people there, roughly two-thirds of whom are Saudi nationals. It assembles the Hawk trainer aircraft in Saudi Arabia and is also doing some work on its Typhoon fighter jets.

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Bin Salman’s plans does present a number of challenges said Khalid Al-Otaibi, vice-president of manufacturing for BAE in Saudi Arabia. Describing the plans, Al-Otaibi said that transferring work from Europe or the US to the Kingdom was complicated and costly. In addition to the high cost, meeting international standards and ensuring young Saudi graduates are sufficiently qualified and trained was cited as a major stumbling block.

Industry experts pointing to Bin Salman’s desire to “grow quickly”, said it was a long process “you are not going to go from 2 per cent [of local spend] to 50 per cent in a few years” Rick Edwards, executive vice-president of Lockheed Martin International said.

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