Top Spenders on Defense in Middle East

Top Spenders on Defense in Middle East
Among the top defense spenders in 2018; in the Middle East region: Saudi Arabia, Turkey, Israel, and Iran are the top spenders. According to SIPRI, the total military expenditure of the countries in the Middle East for which data is available is, overall decreased.

1 . Top Spenders on Defense in the Middle East

  1. Saudi Arabia: USD 67.5 billion (8.77% of total GDP)
  2. Turkey: USD 18.9 billion (2.5% of total GDP)
  3. Israel: USD 15.9 billion (4.34% of total GDP)
  4. Iran: USD 13.19 billion (2.66% of total GDP)
  5. UAE: USD 10.7 billion (2.58% of total GDP)
  6. Kuwait: USD 7.2 billion (5.05% of total GDP)
  7. Oman: USD 6.7 billion (8.17% of total GDP)
  8. Iraq: USD 6.31 billion (2.72% of total GDP)
  9. Qatar: USD 5.79 billion (3.01% of total GDP)
  10. Egypt: USD 3.1 billion (1.24% of total GDP)
  11. Lebanon: USD 2.77 billion (4.99% of total GDP)
  12. Jordan: USD 1.95 billion (4.68% of total GDP)
  13. Yemen: USD 1.44 billion (5.35% of total GDP)
  14. Bahrain: USD 1.39 billion (3.59% of total GDP)
Top Countries in Middle East by Defence Expenditure 2018 (USD billion)
Source: Worldbank, SIPRI, Globaldata, and MarketResearchReports.com
 
The combined defense budgets of above middle eastern countries would average 4.17% of gross domestic product 2018, which is around average USD 11.26 billion. Proxy wars around the Middle East are the prime reason for growing arms spending in recent years. The Saudi-led coalition, of whom the UAE is also part of, and Iran are in a ‘Cold War’ of proxies in several countries for years.

1. Saudi Arabia

Saudi Arabia is one of the largest defense spenders in the world, behind the US, China, and Russia, with a military budget valued at USD 67.5 billion in 2018. The country is the largest market in the Middle East due to its robust economic and financial position, backed by its oil exports. The rising tension with Iran, aggressive procurement strategies, and modernization programs, along with the need to strengthen its indigenous defense industry, are the main factors boosting the country’s military expenditure.
 
On a cumulative basis, the country is expected to invest US$300.2 billion for defense purposes, of which US$90.8 billion is earmarked for capital expenditure to fund defense procurements. The government’s well-defined military modernization plans along with its efforts to suppress Houthi insurgency in Yemen as well as its support for rebel factions within Syria are expected to stimulate the expenditure over the next few years. The MoD is expected to invest in the physical security of vital assets, development of land-based C4ISR capabilities and multi-role aircraft among others.

2. Turkey

Turkish defense spending rose 24% to USD 19 billion in 2018, the country is just behind Canada and ahead of Spain and Israel in total defense outlays. Turkey’s spending on the military surged 65 percent between 2009 and 2018, according to SIPRI, which researches global arms expenditure. The country’s strained relationship with Greece, persistent threats from the Kurdish Workers Party (PKK), active participation in peacekeeping missions, and the reduction in foreign dependency for military equipment procurement, drove defense expenditure during the historic period.
 
Market volumes declined with a compound annual rate of change (CARC) of -3.9% between 2013 and 2017, to reach a total of 522,800 active serving personnel in 2017. The AKP (The Justice and Development Party, abbreviated officially AK Parti in Turkish) has put forward its 2023 vision, a defense policy with Turkey seeking to improve its defense industry and lessen reliance on imports.

3. Israel

Israel is one of the countries with the largest per capita defense expenditures in the world, USD 2,090.9 in 2018, Israel is an attractive defense market. The country’s defense expenditure is projected to continue to grow due to both internal and external security threats. Between 2014 and 2018, the country’s capital expenditure allocation stood at an average of 51% of the total defense budget.

Overall, Israel is projected to spend a total of USD 72.3 billion (including funding through US foreign military financing) on the acquisition of military hardware between 2019 and 2023. Between 2015 and 2019, the country’s capital expenditure allocation stood at an average of 52.1% of the total defense budget and is expected to increase slightly to an average of 52.6% over the forecast period. Overall, Israel is projected to spend a total of USD 68.5 billion on the acquisition of military hardware between 2020 and 2024.

The MoD is expected to invest in physical security of critical infrastructure, land-based C4ISR systems, infrastructure construction, Armored Personnel Carriers (APC), Multirole Fighter aircraft and Corvettes among others.

4. Iran

Iran’s military outlay was USD 13.2  billion in 2018, which is decreased by 9.5% between 2017 and 2018 as the Iranian economy slipped into recession and country's inflation increased from 10 percent in 2017 to 30 percent in 2018. Iran’s economy faced a crisis in 2018, with its currency declining four-fold against major currencies and its oil exports, which generate most of its income, reaching one million barrels a day from a high of 2.5 million. New U.S. sanctions also played a major role in the sudden deterioration of Iran’s economy.
 
According to The Institute for International Strategic Studies, the Islamic Revolutionary Guard Corps (IRGC) engages in aggressive revenue-raising activities by establishing private companies, as well as using its powerful political influence to secure infrastructure contracts and private tenders worth millions of dollars in diverse sectors, including housing development, energy, road construction, food and transportation.

5. UAE

UAE defense expenditure stands at USD10.7 billion in 2018 and registered a compound annual growth rate (CAGR) of -5.94% during the historic period. The country’s strained relationship with Greece, persistent threats from the Kurdish Workers Party (PKK), active participation in peacekeeping missions, and the reduction in foreign dependency for military equipment procurement, drove defense expenditure during the historic period. With this trend expected to continue, expenditure is anticipated to register a CAGR of 8.36% over the forecast period to value US$15.8 billion in 2023.

As a percentage of GDP, the country’s defense expenditure will average 1.36% over the forecast period, which is marginally declining compared to an average of 1.44% recorded during the historic period. 

6. Kuwait

With a military expenditure of USD 7.2 billion in 2018, Kuwait is expected to cumulatively spend USD 48.3 billion on its military by 2023. Kuwaiti military and security expenditure, which stood at USD 7.6 billion in 2018, registered a CAGR of 6.87% during the historic period.
 
Between 2014 and 2018, the country allocated an average of 19.3% of the total defense budget to capital expenditure, and the remaining 80.7% to revenue expenditure. The country’s revenue expenditure is characterized by high levels of investment in operating its military, such as salaries and the pensions of retired personnel. Over the forecast period, the Kuwaiti Ministry of National Defense (MND) is expected to increase its current level of allocation for capital expenditure, averaging 21.3% of the total defense budget. The MoD is expected to invest in multirole aircraft, corvettes, and airborne C4ISR among others.

7. Oman

Omani military expenditure is USD 9 billion in 2019 and registered a CAGR of -2.39% during 2015-2019. The defense spending in the Middle East has declined over the past year, despite a string of ongoing conflicts across the region, including in Syria, Iraq, Yemen, and Libya. The decline in the defense budget during the historical period is primarily due to the country’s heavy reliance on oil and gas revenues to fund its expensive defense modernization programs.

During 2015-2019, an average of 40.1% of the country’s total defense budget was allocated to capital expenditure, while an average of 59.9% was reserved for revenue expenditure. An increase in capital expenditure during the forecast period is primarily due to the country’s procurement plans for multirole aircraft, missile defense systems, armored vehicles, and military rotorcraft. The MoD is expected to invest in Land-based physical security of critical infrastructure, land-based C4ISR and infrastructure construction.

8. Iraq

Iraqi military expenditure values USD 6.31 billion in 2018 and registered a CAGR of -5.76% during 2014-2018. The decline in the defense budget during the historic period is primarily due to the country’s heavy reliance on oil and gas revenues to fund its expansive defense modernization programs.
 
The severe erosion of global oil and gas prices during 2016-2017 adversely impacted the country’s defense spending capability and forced it to cut back on its defense spending.

9. Qatar

With a cumulative expenditure of over USD 39 billion during the forecast period, Qatar has plans to bolster its defense against Iranian ballistic missiles and long-range rockets. Qatari defense expenditure stands at USD 5.8 billion in 2018.
 
Qatari defense expenditure is primarily driven by its participation in peacekeeping initiatives, the upgrade of military equipment, such as Terminal High Altitude Area Defense Systems (THAADS) and PAC missile defense systems, multi-mission and attack helicopters, fighter aircraft main battle tanks, and the procurement of advanced technology equipment.

10. Egypt

Egypt’s total defense expenditure, including US military aid, valued USD 3.1 billion in 2018 and is anticipated to post a forecast-period CAGR of 6.58% to reach US$4.4 billion in 2023. The country has undergone a period of political turmoil since January 2011 which began with the ousting of President Hosni Mubarak following 30 years of autocratic rule and ended in the nation’s first democratic elections which saw a new President being elected and deposed 13 months later.

During the historic period, Egypt allocated an average of 16.4% of its total defense budget towards capital expenditure. However, capital expenditure’s share of the overall defense budget is anticipated to increase to an average of 17.1% over the forecast period, due to the country’s procurement plans. Capital investment is anticipated to be driven by the need to replace obsolete military equipment such as multirole fighter aircraft, helicopters, air defense missile systems, naval vessels, offshore patrol vessels, surveillance systems, and light weapons and ammunition.

11. Lebanon

Plagued by sectarian violence, the country faces increasing threats of militancy, homegrown extremism, and unrest in refugee camps. In addition, the Syrian civil war has resulted in a large number of refugees’ crossing over to Lebanon to live in camps. As a consequence, these refugee camps have increased the burden on the Lebanese economy by fuelling sectarian violence in the country and complicating its internal security.

Lebanon’s military expenditure, which is valued at USD 2.77 billion in 2018, registered a CAGR of 2.98% during 2014-2018. Moreover, the country is anticipated to record a CAGR of 5.01% over the forecast period to value US$3.3 billion in 2023. As a percentage of GDP, the country’s defense and security expenditure is estimated to average 4.8% over the forecast period compared to an average of 4.9% recorded during the historic period.

12. Jordan

Jordan’s defense expenditure rose from USD 1.6 billion in 2014 to USD 2 billion in 2018, at a CAGR of 6.66% due to the country’s precarious security environment, aggravated by the responsibility of hosting a large refugee population. Attempts to modernize its military equipment will, therefore, drive its defense expenditure over the forecast period, which is projected to rise from US$2.1 billion in 2019 to USD 2.6 billion by 2023, at a CAGR of 5.60%. Jordan will maintain its budget allocation for capital expenditure at an average of 3.3% over the forecast period, with the US providing military aid.

13. Yemen

Yemeni defense expenditure values USD 1.7 billion in 2017 and registered a CAGR of 0.01% during the historic period. The budget in the historic period was mainly driven by civil war, extremist infiltration, large scale presence of groups such as radical extremists and drug traffickers, and the restructuring of military units to make the defense sector more effective and efficient.

14. Bahrain

Military Expenditure in Bahrain decreased to 1.35 USD Billion in 2018 from 1.53 USD Billion in 2017. Military Expenditure in Bahrain averaged 580.92 USD Million from 1971 until 2018, reaching an all time high of 1566 USD Million in 2014 and a record low of 54 USD Million in 1975.

 
 
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Table of Contents

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