meed-logo

line1 line2 line3
SIGN IN / REGISTER

Middle East defence spending accelerates

7 May 2023

 

Global military spending reached a record high of $2.24tn in 2022, up 3.7 per cent year-on-year, according to newly compiled data from the Stockholm International Peace Research Institute (SIPRI), as the Ukraine war and tensions in East Asia prompted governments to ramp up their investment in equipment.

It marks the eighth consecutive year of growth in global defence expenditure. The sharpest rise was in Europe, where there was a 13 per cent increase in spending, but the Middle East and North Africa (Mena) region was not far behind, with an 11.2 per cent rise on the previous year.

“The continuous rise in global military expenditure in recent years is a sign that we are living in an increasingly insecure world,” said Nan Tian, a senior researcher with SIPRI’s military expenditure and arms production programme.

“States are bolstering military strength in response to a deteriorating security environment, which they do not foresee improving in the near future.”

Rising regional outlay

The rise in the Mena region’s total to $168bn was mostly due to an increase in spending by Saudi Arabia and Qatar and, to a lesser extent, Lebanon and Iran.

As has long been the case, Saudi Arabia dominated the picture, with a defence outlay of $75bn in 2022 – up 16 per cent on the year before and its first increase since 2018.

Military spending data for the Middle East is often opaque. Other large spenders, according to SIPRI’s database, include Israel ($23.4bn), Qatar ($15.4bn), Algeria ($9.1bn), Kuwait ($8.2bn), Iran ($6.8bn) and Oman ($5.8bn).

However, the institute has no estimates for a number of other countries, most notably the UAE. Its most recent figure for the UAE is for 2014, at which point the defence budget was an estimated $22.8bn, the region’s second-biggest after Saudi Arabia that year.

There are also no current estimates for defence spending by the countries suffering the greatest instability, including Libya, Sudan, Syria and Yemen.

Others have drawn up figures for the UAE, though. The London-based International Institute for Strategic Studies (IISS) estimated the UAE’s defence spend was $20.4bn last year in its recently published Military Balance 2023 report. That marked a 6 per cent rise on the previous year’s estimate.

While the UAE may not have the largest budget in the region, IISS says its armed forces are “arguably the best trained and most capable of all GCC states”.

Unclear Iranian picture

The outlay by Iran is also a matter of some debate, given the questions over the value of the rial and the country’s high inflation rate of around 40 per cent.

SIPRI says that, in local currency terms, Iran’s defence spending grew by 38 per cent to IR1,988tn in 2022. That is equivalent to some $46.9bn at the government’s official exchange rate, but far less at the open market rate used by SIPRI.

Inflationary pressures have become a common concern for countries around the world, even if few are having to cope with price rises as rapid as in Iran. Many Western countries are also dealing with an energy supply crisis due to the war in Ukraine, which has led to prices spiking upwards and sanctions being imposed on Moscow.

The Middle East’s oil exporters have benefitted from elevated oil prices, making it easier to afford the rise in defence spending.

However, the most notable direct consequence of the conflict in Ukraine for the Middle East has been the surge in military cooperation that has followed between Russia and Iran. Moscow’s failure to quickly take control of Ukraine has led to a drawn-out conflict and, as its weapons inventory has become depleted, it has imported drones from Iran to fill in some of the gaps.

That cooperation may yet extend in the other direction, with Iranian media reporting in March a potential deal for Tehran to receive Russian Sukhoi Su-35 fighter jets. Iran will also have gained useful information about the performance of its Shahed 131, Shahed 136 and Mohajer-6 drones in the war.

Lingering Gulf concerns

Such developments will likely concern other Gulf governments, even if regional tensions have eased somewhat due to the rapprochement between Saudi Arabia and Iran, announced via a China-brokered agreement in March.

That fits into a broader regional trend for de-escalation and diplomatic advances. Recent talks between Saudi officials and Yemen’s Houthi rebels in Sanaa could yet pave the way to resolving that conflict – further discussions between the two sides are due to take place in May, possibly in Muscat.

The levels of violence in Libya and Syria have also been on a downward trajectory over the past year, but both remain susceptible to further outbreaks of fighting, as does Iraq.

Elsewhere, though, relations between Algeria and Morocco remain problematic, and the prospects of any peace deal between the Israelis and Palestinians look as distant as ever with the hardline government of Israel’s Prime Minister Benjamin Netanyahu in office.

Any reduction in regional tensions will be a welcome development given the high burden of defence spending on local economies. As IISS points out, many Mena countries’ defence budgets are very large relative to the size of their economies.

As has long been the case, Oman spends more as a proportion of its GDP than any other country in the region, with its 2022 outlay equivalent to 5.9 per cent of GDP, according to IISS calculations.

It is followed by Kuwait at 5 per cent and Saudi Arabia at 4.5 per cent.

The average for the region is 3.8 per cent of GDP, more than double the global average of 1.7 per cent. The overall trend for rising budgets means that the economic burden is unlikely to fall away any time soon.

https://image.digitalinsightresearch.in/uploads/NewsArticle/10816511/main.gif
Dominic Dudley

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Dubai tenders Warsan waste-to-energy consultancy contract

    16 February 2026

    Dubai Municipality has issued a tender for consultancy services on the second phase of the Warsan waste-to-energy (WTE) plant.

    The tender covers feasibility, procurement and construction supervision services for the project.

    The bid submission deadline is 25 February.

    The project relates to the planned expansion of the Warsan WTE plant in Dubai. The scheme has an estimated budget of $500m.

    The facility will be located in Warsan 2, next to the Al-Aweer sewage treatment plant.  As MEED understands, it will use treated wastewater from that facility.

    The project scope includes construction of treatment lines, a boiler hall, waste bunkers, a flue gas treatment system, a main electrical station and associated infrastructure.

    The contract duration is six years

    Expansion strategy

    The original Warsan WTE plant, Dubai’s first major WTE public-private partnership (PPP) project, reached full commercial operations in 2024.

    Located in the Warsan area, the AED4bn ($1.1bn) facility treats 1.9 million tonnes of municipal solid waste annually, generating up to 220MW of thermal energy that is fed into the local grid.

    In February 2023, state utility Dubai Electricity & Water Authority (Dewa) and Dubai Waste Management Company signed the power-purchase agreement (PPA) for the project.

    Dubai Waste Management Company, the special-purpose vehicle implementing the scheme, reached financial close in June 2021 for the project.

    The main contractor was a consortium of Belgium’s Besix Group and Hitachi Zosen Inova of Switzerland.

    The expansion aligns with Dubai’s long-term waste strategy. In February 2022, the emirate approved a AED74.5bn budget covering waste management initiatives from 2021 to 2041.

    The strategy promotes innovation in waste management, recycling and energy conservation. It anticipates private sector contributions of AED70.5bn, equivalent to about 95% of the total planned investment.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15660272/main.jpg
    Mark Dowdall
  • Saudi Arabia wastewater plant reaches financial close

    16 February 2026

     

    The planned $500m industrial wastewater treatment plant (IWWTP) in Jubail in Saudi Arabia’s Eastern Province has reached financial close, sources have confirmed to MEED.

    Located in Jubail Second Industrial City, the facility will treat and recycle wastewater from Satorp’s under-construction Amiral chemical derivatives complex, also in Jubail.

    The project reached financial close after hedging arrangements were completed on 12 February, sources said.

    A consortium of Saudi utilities provider Marafiq, the regional business of France’s Veolia and Bahrain/Saudi Arabia-based Lamar Holding is developing the project under a 30-year concession agreement.

    Saudi Aramco Total Refining & Petrochemical Company (Satorp), a joint venture of Saudi Aramco and France’s TotalEnergies, awarded the contract last September.

    As MEED exclusively reported, Egypt’s Orascom Construction is the engineering, procurement and construction (EPC) contractor for the project, which is expected to be commissioned in 2028.

    Marafiq, formally Power & Water Utility Company for Jubail and Yanbu, will own a 40% stake in the dedicated project company. Veolia Middle East will hold a 35% stake, and Lamar Holding’s Lamar Arabia for Energy will hold the other 25%.

    The planned IWWTP, which will primarily serve the $11bn sprawling Amiral chemicals zone, will implement advanced water treatment and recovery technologies to process complex industrial effluents, including spent caustic streams. Treated water will be reintegrated into the industrial processes, supporting closed-loop reuse and energy efficiency.

    As of February, more than 50% of construction on Satorp’s Amiral facility has been completed. Commissioning is targeted for the end of 2027.

    Construction is also ongoing on a separate industrial wastewater treatment plant (IWTP8) in Jubail. Saudi Services for Electro Mechanic Works is the contractor for the development’s fourth expansion phase.

    The Marafiq-owned project is scheduled to be completed by the end of the quarter.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15660112/main.jpg
    Mark Dowdall
  • Riyadh tenders Expo 2030 site offices contract

    16 February 2026

     

    Saudi Arabia’s Expo 2030 Riyadh Company (ERC), tasked with delivering the Expo 2030 Riyadh venue, has tendered a contract that includes the construction of site offices required for the initial construction works.

    MEED understands that the package was retendered in early February, with a bid submission deadline of 26 February.

    The contract was first tendered in May last year, with bids submitted in July, as MEED reported.

    The tendering activity follows the Royal Commission for Riyadh City (RCRC) issuing a design-and-build tender for the construction of a new metro station serving the Expo 2030 site.

    The new metro station will be located on Line 4 (Yellow Line) of the Riyadh Metro network.

    MEED understands that the tender was floated in early February, with a bid submission deadline of 3 May.

    Construction work on the Expo 2030 Riyadh site is progressing at an accelerated pace. In January, ERC awarded an estimated SR1bn ($267m) contract to deliver the initial infrastructure works at the site.

    The contract was awarded to the local firm Nesma & Partners.

    The scope of work covers about 50 kilometres (km) of integrated infrastructure networks, including internal roads and essential utilities such as water, sewage, electrical and communication systems, and electric vehicle charging stations.

    Contractors are also bidding for infrastructure lots two and three. In December, MEED reported that ERC had floated another tender for the project’s initial infrastructure works.

    The masterplan encompasses an area of 6 square kilometres, making it one of the largest sites designated for a World Expo event. Situated to the north of the Saudi capital, the site will be located near the future King Salman International airport, providing direct access to various landmarks within Riyadh.

    Countries participating in Expo 2030 Riyadh will have the option to construct permanent pavilions. This initiative is expected to create opportunities for business and investment growth in the region.

    The expo is forecast to attract more than 40 million visitors.

    In a statement, the Public Investment Fund said: “During its construction phases, Expo 2030 Riyadh and its legacy are projected to contribute around $64bn to Saudi GDP and generate approximately 171,000 direct and indirect jobs. Once operational, it is expected to contribute approximately $5.6bn to GDP.”

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15659580/main.jpg
    Yasir Iqbal
  • Acwa refinances $2.45bn Hassyan IPP debt

    16 February 2026

    Register for MEED’s 14-day trial access 

    Saudi Arabia’s Acwa has announced it has refinanced the existing debt facilities of the Hassyan independent power project (IPP) in Dubai.

    In a post on social media platform LinkedIn, the developer said the transaction is the largest refinancing it has completed, valued at $2.45bn.

    It added that the deal is backed by a new group of lenders. These lenders have yet to be disclosed.

    The Hassyan IPP has a generation capacity of 2,400MW and reached full commercial operations in 2023.

    The project was originally developed as a coal-fired IPP. It was later converted to operate on natural gas instead, reflecting changes in Dubai’s power generation strategy.

    A consortium comprising Acwa – formerly Acwa Power – and China’s Harbin Electric won the contract to develop the project in 2016.

    Acwa and Harbin Electric hold 26.95% and 14.7% stakes, respectively, in the project company Hassyan Energy Company. Dubai Electricity & Water Authority (Dewa) holds 51%, while Silk Road Fund owns 7.35%.

    The Hassyan plant forms part of Dewa’s wider generation portfolio. Other major assets include the Jebel Ali and Al-Aweer power complexes, Mohammed Bin Rashid Al-Maktoum (MBR) Solar Park and the Hatta hydroelectric project.

    MBR Solar Park is the largest single-site solar park in the world, with a planned capacity target of 7,260MW by 2030.

    Dewa recently extended the bid deadline for its seventh phase, which will add 2,000MW from photovoltaic solar panels and includes a 1,400MW battery energy storage system with a six-hour capacity.

    The new bid submission deadline is 1 May.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15659537/main.jpg
    Mark Dowdall
  • SWPC rebrands as Sharakat to reinforce PPP focus

    13 February 2026

    Register for MEED’s 14-day trial access 

    Saudi Water Partnership Company (SWPC) has unveiled a new corporate identity as part of a strategy to reinforce the role of public-private partnerships (PPPs).

    At a ceremony in Riyadh, the company said it will operate under the name Sharakat, reflecting its “evolution and expanding mandate in the kingdom’s water sector”.

    The new identity comes as Saudi Arabia expands the use of PPPs to deliver infrastructure projects.

    In January, the government launched a National Privatisation Strategy targeting more than 220 PPP contracts by 2030, including projects in the water sector.

    The government is targeting over $64bn (SR240bn) in private capital investments in this period, which it said would be “a new phase focused on execution and accelerating delivery”.

    Previously, the 2018 privatisation programme had focused on the ‘foundational phase’.

    SWPC has served as the principal offtaker of all water in Saudi Arabia since 2017. Its mandate covers desalinated water, transmission and treatment projects. It also includes small-scale plants, collection networks and strategic water reservoirs.

    The total investment value of its current projects exceeds SR56bn ($14.9bn), the offtaker said.

    According to MEED Projects, SWPC has over $11bn-worth of PPP projects in the pipeline, with two projects ($2.10bn) currently under bid evaluation.

    In December, local firm Vision Invest was named as the preferred bidder to develop and operate the 859-kilometre Riyadh-Qassim independent water transmission pipeline project. 

    The consortium of Miahona (Saudi Arabia), Marafiq Company and Buhur for Investment was also named as the preferred bidder for the Arana independent sewage treatment plant (ISTP).

    Financial close for both projects is expected in 2026.

    Meanwhile, SWPC has issued a request for proposals for the $150m Riyadh East ISTP, which will have a treatment capacity of 200,000 cubic metres a day (cm/d), expandable to 400,000 cm/day in the second phase.

    The bid submission deadline is 2 April. 

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15647732/main.jpg
    Mark Dowdall