Military spending set to rise in the Middle East despite already high burden

A global defense industry report from Deloitte expects a rise in national spending over the next decade across the Middle East – with the region’s relative outlay already well above its weight.

Professional services giant Deloitte has in its latest global aerospace and defense industry outlook predicted mid-single-digit growth in regional Middle East military spending annually over the coming decade – despite the region already featuring seven out of the top ten countries worldwide with the highest military expenditure as a percentage of GDP, led by Saudi Arabia at an estimated 8.8 percent.

According to data sourced by Deloitte from SIPRI (Stockholm International Peace Research Institute) – which has tracked government military expenditure internationally since 1949 – total military spending by states in the Middle East (exc. Qatar, Syria, the UAE and Yemen for incomplete data) fell by almost 2 percent last year – including a 6.5 percent reduction in Saudi Arabia despite its current campaign in Yemen.

Still, Saudi Arabia, with a population of just over 30 million people, remains the world’s third largest military spender behind the US and China (pop. ~1.385 billion), coughing up around $67.6 billion last year – although the International Institute for Strategic Studies (IISS) puts that figure at $82.9 billion. And Deloitte expects this outlay to grow over the coming decade, pointing to the stabilisation of oil prices at much higher levels compared to the 2015–17 period.

Indeed, as oil revenues dried up in the wake of the 2014 global price crash, Saudi military spending after a 72 percent increase between 2009 and 2015 fell by 28 percent the following year, nudging back up by 11 percent in 2017 when the market had steadied. It is unclear if this latest decrease in part reflects improved operational efficiencies, with the Kingdom embarking on a recent ongoing campaign to modernise its forces.

Still, as one of the most targeted countries worldwide, Saudi Arabia has to contend with a rising cyber-warfare threat, particularly from increasingly sophisticated malignant actors in Iran, and the Deloitte report contends that global aerospace and defense industry growth will in the short-term be driven in part by heightened geopolitical tensions in the region, together with the evergreen North Korean threat and demand from China, India and Japan.

Yet, countries the Middle East already bear some of the world’s highest military burdens by far. Of the countries where data is available, only 20 according to SIPRI allocated 3.0 per cent or more of their GDP to the military last year, while around two thirds of the world’s nations committed less than 2 percent. In the Middle East & North Africa, all of Saudi Arabia, Oman, Algeria, Kuwait and Lebanon – the latter which is suffering a chronic economic crisis – spent upwards of 5 percent, with KSA and Oman at above 8 percent.

With Jordan and Israel, both at above 4 percent, included – and keeping in mind the lack of current data from the UAE (estimated to be in the top 15 biggest spenders worldwide, but outside of the 25 largest economies), Qatar and Syria among others – the MENA region features seven of the ten highest relative rates of spending. And when using the IISS methodology, the GDP percentages of both Oman and Saudi Arabia’s military spending rises t0 above an incredible 10.5 percent.

As could be expected, the Middle East then also features many of the nations with the highest military spending per capita – led globally by Oman at $2,561 per head last year, followed closely by Saudi Arabia ($2,506), and then Israel and Kuwait (~$2,200 apiece). In total terms, depending on the source, the region also features three other nations (exc. UAE) among the top 15 or 20 biggest spenders: Turkey (up by 24 percent last year, the highest increase of any nation), Israel, and Iran (down 9.5 percent).

However, despite its massive outlay, Saudi Arabia doesn’t feature among the world’s top 20 powerful militaries according to analyst Global Firepower, which takes in a host of factors to arrive at its rankings. Here, the Kingdom lands at 25th, eleven places below the 14th-ranked Iran, with Israel in 17th. In fact, outside of Turkey, Egypt is considered the strongest regional power at 12th – although SIPRI seems quietly skeptical of its supposed $3.1 billion 2018 military budget.