Defence companies see opportunities in Middle East as tensions rise28 Feb 2017
Image Credit: Abdul Rahman/Gulf News
Abu Dhabi: International defence companies are planning to cash on growing security threats and conflicts, eyeing more opportunities and new deals in the region.
On top of major unrest in Syria and Yemen, the re-emergence of Iran after years of international sanctions has further stoked tensions in the region.
Kalashnikov, the company that manufactures the AK-47 assault rifle, said it sees Middle East as a growing market for their products in the coming years.
“We see our market in the Middle East growing as we diversify into manufacturing various products. And the ongoing conflict in the region drives interest for our products from different customers,” Vladimir Dmitriev, Deputy CEO for Sales and Marketing, told Gulf News on the sidelines of the International Defence Exhibition (Idex 2017).
“Kalashnikov is no more just a manufacturer of simple arms, but we are becoming multifaceted defence holding producing systems that can be used on land, in the air, and in sea.”
He said there was a lot of interest in their products from the UAE — so much so they are considering opening a representative office in the country and in other parts of the region.
“Our revenue potential is growing as we manufacture a variety of products. We have diversified to make boats, hunting weapons and drones.”
The company’s chief executive Alexey Krivoruchko told Reuters sales doubled last year, helped by demand in the Middle East for its drones, missiles, rifles and military vehicles.
According to consultancy IHS Jane’s, Middle East defence budgets will return to growth in 2017 as the region increases its drive to acquire new military capabilities following a dip due to the collapse in oil prices. It expects 2 to 3 per cent growth a year by 2018.
The US based Raytheon, which does significant business in Saudi Arabia, Kuwait, Qatar and the UAE, also sees further opportunities in the region.
“We will continue to nurture our relationship and look for more opportunities in the region,” said Alan Davis, programme director for naval and area mission defence for Raytheon, which signed an agreement with the UAE navy to supply Rolling Airframe Missiles (RAMs) Block 2, designed to protect ships against anti-ship missiles.
The company has also won some of the biggest deals announced at Idex this year. Raytheon was awarded two contracts of Dh1.3 billion and Dh828 million to supply ammunition and spare parts for the UAE Armed Forces.
Textron Systems, a manufacturer of military vehicles, also sees the Middle East as an important region. It has delivered around 110 vehicles in Afghanistan and Iraq last year and is set to deliver another 100 this year.
“This is one of the most important regions that we sell into and historically sold into. When we look at our strategy, the Middle East is the most important region. Our vehicles are currently in fight against Daesh,” Jonathan Dalrymple, Textron Systems’ vice-president for business development, told Gulf News.
Russian company Rostec, one of the biggest global manufacturers of arms, is also eyeing significant new deals in the region. It has signed an agreement with the UAE to supply Sukhoi warplanes and is cooperating with the emirates in building a light combat fifth generation fighter jet in the next seven to eight years.
The company delivered $1 billion worth of surface-to-air missile systems to Iran last year and is in discussion with Egypt to supply arms, Rostec CEO Sergey Chemezov told reporters.