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
  • Oil tankers attacked in Iraqi waters

    12 March 2026

    Register for MEED’s 14-day trial access 

    Two tankers carrying Iraqi oil products were set on fire after being attacked in Iraq’s territorial waters near the country’s southern export terminals, increasing concerns about global energy supplies.

    After the attack, the country’s Oil Ministry said that it saw the attacks as “a worrying indicator of escalating tensions in a vital area of the global economy and energy supply”.

    It added that “the safety and safety of navigation in international sea corridors and energy supply routes should be kept away from regional conflicts”.

    The Oil Ministry said the attacks had a direct impact on the stability of the global economy and energy markets, as well as putting the lives of civilians and workers in the maritime transport sector at risk.

    Farhan Al-Fartousi, from Iraq’s General Company for Ports, told state television that one crew member had been killed in the attack and that 38 crew members had been rescued.

    Iraq’s state-owned oil marketing company Somo said that the Maltese-flagged oil tanker Zefyros was attacked as it was preparing to enter the port of Khor Al-Zoubair, where it would have taken on board an additional 30,000 tonnes of liquid naphtha.

    The second targeted vessel, Safesea Vishnu, was sailing under the Marshall Islands flag and was chartered by an Iraqi company, according to Somo.

    Iraq’s oil production has fallen steeply since the conflict began, from 3.3 million barrels a day (b/d) to less than 1 million b/d.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15951323/main.png
    Wil Crisp
  • Chevron yet to agree terms for Iraq oil field takeover

    12 March 2026

     

    US-based oil company Chevron is yet to agree terms with Iraqi state-owned Basra Oil Company (BOC) for its potential takeover of Iraq’s West Qurna-2 oil field, according to industry sources.

    Last month, Chevron signed a preliminary agreement with BOC to explore taking control of the West Qurna-2 oil field.

    Until recently, West Qurna-2 was operated by Russia’s Lukoil, which faces a 28 February deadline to divest its assets in Iraq under sanctions.

    One industry source said: “Chevron is yet to agree terms, and it has made it clear that it wants different terms to the contract that Lukoil had.”

    In January, Iraq’s cabinet approved temporarily nationalising petroleum operations at the West Qurna-2 oil field until a new operator was found.

    Lukoil declared force majeure at the West Qurna-2 oil field in November, after sanctions by the UK, EU and US were announced in October.

    The Russian company had a 75% stake in the asset.      

    Prior to Russia’s Lukoil declaring force majeure, Iraq’s state oil authorities froze all cash and crude payments to Lukoil in compliance with the sanctions.

    In a statement released on 1 December 2025, Iraq’s Oil Ministry said that it had extended “direct and exclusive invitations to a number of major American oil companies”.

    Awarded to Lukoil in 2009, West Qurna-2 lies about 65 kilometres northwest of Basra in southern Iraq and produces about 480,000 barrels a day (b/d) of oil, accounting for roughly 10% of the country’s total oil output.

    At the same meeting on 23 February, Chevron also signed a deal relating to the development of the Nasiriyah field, four exploration sites in the province of Dhi Qar and a field in the province of Salahaddin.

    Chevron signed an agreement in principle with Iraq in August 2025 to develop the Nasiriyah oil project in the province of Dhi Qar.

    At the time, Iraq said it expected the Nasiriyah project to reach a production capacity of 600,000 b/d within seven years.

    READ THE MARCH 2026 MEED BUSINESS REVIEW – click here to view PDF

    Riyadh urges private sector to take greater role; Chemical players look to spend rationally; Economic uptick lends confidence to Cairo’s reforms.

    Distributed to senior decision-makers in the region and around the world, the March 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/15944830/main.png
    Wil Crisp
  • Egyptian/Saudi firms to invest $1.4bn in Cairo project

    12 March 2026

    Saudi Arabia’s Sumou Investment, through its subsidiary Adeer International, and Egyptian developer Paragon Developments have signed an agreement to jointly develop a mixed-use project in Mostakbal City, East Cairo.

    According to local media reports, the project will cover about 500,000 square metres and will be developed with a total investment of about $1.4bn.

    The project will be developed by Paragon-Adeer, a joint venture of Paragon Developments and Adeer International.

    The announcement follows a $1.4bn deal signed in July last year between Adeer International and another Egyptian developer, Midar, to jointly develop a mixed-use project in Mostakbal City.

    Midar, Sumou Investment and Hassan Allam Properties are partnering to develop $2bn in hospitality and leisure projects across several locations in Cairo within Midar-owned land parcels. 

    According to GlobalData, Egypt’s residential construction sector is expected to grow by 8.3% from 2026 to 2029, supported by investments in the housing sector and the government’s focus on addressing the country’s growing housing deficit amid a rising population.

    The commercial construction sector is expected to register real-term growth of 6.6% during 2026-29, supported by a rebound in tourism and hospitality markets and an improvement in investment in office buildings and wholesale and retail trade activities.

    MEED’s March 2026 report on Egypt includes:

    > COMMENT: Egypt’s crisis mode gives way to cautious revival
    > GOVERNMENT: Egypt adapts its foreign policy approach
    > ECONOMY & BANKING: Egypt nears return to economic stability
    > OIL & GAS: Egypt’s oil and gas sector shows bright spots
    > POWER & WATER: Egypt utility contracts hit $5bn decade peak
    > CONSTRUCTION: Coastal destinations are a boon to Egyptian construction

    To see previous issues of MEED Business Review, please click here

     

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15939746/main.jpg
    Yasir Iqbal
  • Qiddiya gives high-speed rail prequalifying firms more time

    12 March 2026

     

    Saudi Arabia’s Royal Commission for Riyadh City, in collaboration with Qiddiya Investment Company (QIC) and the National Centre for Privatisation & PPP, has set a new deadline of 16 April for firms to submit prequalification statements for the development of the Qiddiya high-speed rail project in Riyadh

    The prequalification notice was issued on 19 January, with an initial submission deadline of 17 March.

    The clients are considering delivering the project using either a public-private partnership (PPP) model or an engineering, procurement, construction and financing (EPCF) basis.

    Firms have been asked to prequalify for one of the two models.

    Last month, the clients invited interested firms to a project briefing session on 23 February at Qiddiya Entertainment City.

    The Qiddiya high-speed rail project will connect King Salman International airport and the King Abdullah Financial District (KAFD) in Riyadh with Qiddiya City.

    Also known as Q-Express, the railway line will operate at speeds of up to 250 kilometres an hour, reaching Qiddiya in 30 minutes.

    The line is expected to be developed in two phases. The first phase will connect Qiddiya with KAFD and King Khalid International airport.

    The second phase will start from a development known as the North Pole and travel to the New Murabba development, King Salman Park, central Riyadh and Industrial City in the south of Riyadh. 

    In November last year, MEED reported that more than 145 local and international companies had expressed interest in developing the project.

    These included 68 contracting companies, 23 design and project management consultants, 16 investment firms, 12 rail operators, 10 rolling stock providers and 16 other services firms.

    In November 2023, MEED reported that French consultant Egis had been appointed as the technical adviser for the project.

    UK-based consultancy Ernst & Young is acting as the transaction adviser on the project. Ashurst is the legal adviser.

    Qiddiya is one of Saudi Arabia’s five official gigaprojects and covers a total area of 376 square kilometres (sq km), with 223 sq km of developed land. 

    READ THE MARCH 2026 MEED BUSINESS REVIEW – click here to view PDF

    Riyadh urges private sector to take greater role; Chemical players look to spend rationally; Economic uptick lends confidence to Cairo’s reforms.

    Distributed to senior decision-makers in the region and around the world, the March 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/15939059/main.gif
    Yasir Iqbal
  • Wynn resumes construction on Ras Al-Khaimah project

    12 March 2026

    Register for MEED’s 14-day trial access 

    US-based Wynn Resorts said on 11 March that site activity on its resort project on Ras Al-Khaimah’s Al-Marjan Island has restarted after work was temporarily halted. New measures are in place to ensure the safety and security of the workforce. 

    “Wynn employees have been offered the opportunity to work from abroad, if their home embassy recommends they do so,” the company added.

    The $5.1bn project involves the construction of an integrated resort with 1,500 rooms, high-end shopping, MICE venues and the UAE’s first confirmed gaming area. It is scheduled to open in spring 2027.

    The 70-floor 283-metre-tall main structure was topped out in December 2025.

    Financially, Wynn Resorts holds a 40% equity stake in the joint-venture development company alongside local partners Marjan and RAK Hospitality Holding. Wynn reported in late 2025 that about two-thirds of the project’s budget had already been spent or contractually committed, which provides a degree of protection against fluctuating material costs.

    In 2025, Wynn Resorts said it had secured a $2.4bn construction facility to finance the development of the project. In a statement at the time, Wynn said the financing is the largest hospitality financing transaction in UAE history. The loan, available to Wynn Al-Marjan Island FZ-LLC – a subsidiary of the 40%-owned joint venture – is denominated in both AED and US dollars.

    Structured as a delayed draw facility, the seven-year term loan offers competitive market interest rates and substantial financial flexibility for the joint-venture partners.

    The syndicate includes prominent regional and international banks, with Abu Dhabi Commercial Bank and Deutsche Bank serving as joint coordinators. The joint coordinators, along with First Abu Dhabi Bank, Emirates NBD Capital and the National Bank of Ras Al-Khaimah, acted as mandated lead arrangers, bookrunners and underwriters, and Sumitomo Mitsui Banking Corporation acted as lead arranger. First Abu Dhabi Bank is also the agent and security agent for the lenders.

    Dubai-based Alec was appointed as the project’s main contractor in 2023. Earlier in March, Alec said it had resumed on-site and in-office operations across its UAE projects from 4 March.

    In a statement, the company said that it is working closely with clients to ensure a prompt and safe return to full-scale activity.

    The move follows a temporary work-from-home policy introduced across the company’s UAE operations in response to ongoing events, as Alec Holdings reaffirmed its commitment to protecting its workforce while continuing to deliver in clients’ best interests.

    During the same period, the company said its operations in Saudi Arabia remained fully operational.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15952339/main.jpg
    Colin Foreman