Meed | Middle East defence spending accelerates

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.

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Dominic Dudley

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Ongoing political turmoil in the region may be prompting Abu Dhabi to review its approach to key diplomatic issues, not least its relations with its larger neighbour, Saudi Arabia.

In late September, UAE Vice-President Sheikh Mansour Bin Zayed Al-Nahyan travelled to Riyadh for talks with Crown Prince Mohammed Bin Salman and Defence Minister Prince Khalid Bin Salman. Such visits may have been commonplace in the past, but over the past year they have been relatively rare, given the friction between the two Gulf powers over issues such as the conflict zones of Yemen and Sudan, relations with Israel and economic rivalry.

At the start of the year, the UAE retreated from Yemen under pressure from Riyadh, after the UAE-backed Southern Transitional Council made rapid territorial gains at the expense of Saudi-backed groups and advanced close to the kingdom’s southern border.

Since then, against the backdrop of the Iran war, relations have shown further signs of strain, with cross-border financial transactions reportedly being blocked or delayed.

However, there have been intermittent attempts to present a more collegial relationship, such as in July, when a photo emerged on social media of Sheikh Mansour and Prince Khalid posing with their arms around each other, reportedly while on holiday in Europe.

Yemen dynamics

Gains by another group in Yemen may lie behind the latest rapprochement between Riyadh and Abu Dhabi. The visit by Sheikh Mansour on 29 September came in the wake of significant advances by the Houthis, who had recently captured Mokha port and strategically significant areas of land overlooking the Bab El-Mandeb Strait – heightening their ability to menace passing ships.

Saudi Arabia has been leaning on its allies – particularly Pakistan and Turkiye – to support its campaign against the Houthis. It is unclear whether the UAE would be willing to get involved militarily in Yemen again, or whether Riyadh would be happy for it to do so, but it could still be a useful ally in the fight. Analysts have noted that UAE-backed forces have, over the years, had a far greater record than anyone else of scoring battleground victories against the Houthis.

It is also notable that Mansour’s delegation to Riyadh included several senior security officials, including Ali Bin Hammad Al-Shamsi, secretary general of the Supreme Council for National Security; Ali Saeed Matar Al-Neyadi, chairman of the National Emergency, Crisis and Disaster Management Authority; and Nasser Humaid Al-Nuaimi, secretary general of the Tawazun Council for Defence Enablement.

The visit was a surprise, given the GCC states’ lack of unified action this year amid the crises in Yemen and Iran. Speaking at an event in Washington in mid-September, Bernard Haykel, professor of Near Eastern Studies at Princeton University, noted that: “Despite the fact that [the GCC states] all face a common threat in Iran and its proxies, you still don’t see real coordination between them. You still have these differences between the Saudis and the UAE, for instance; you have differences between the Qataris and the UAE. If anything would have united them, this would be it. And you don’t see that kind of unity.”

Writing for the Arab Gulf States Institute in early October, Kristian Coates Ulrichsen, a Baker Institute fellow for the Middle East at Rice University, said Mansour’s visit to Riyadh in late September was “likely meant to signal that the thaw [in bilateral relations] was real” and “designed to enable a more coordinated approach to managing the forces ranged against the Houthis in southern and central Yemen”.

Further signs of warming ties came on 8 October, when UAE Investment Minister Mohamed Hassan Alsuwaidi signed a memorandum of understanding with Saudi Industry and Mineral Resources Minister Prince Abdulaziz Bin Salman covering power grid interconnections, trade in electricity and freight rail connectivity.

On the same day, the Saudi ambassador to the UAE invited President Sheikh Mohamed Bin Zayed Al-Nahyan to attend a GCC-EU Summit in Saudi Arabia later in the month.

Sheikh Mansour was not the only senior Emirati on diplomatic manoeuvres in recent weeks. The day after the vice-president was in Riyadh, national security adviser Sheikh Tahnoun Bin Zayed Al-Nahyan was in Muscat for talks with Sultan Haitham Bin Tariq Al-Said.

Oman is a critical partner for the UAE in several areas. Omani ports have provided a trade lifeline for Emirati importers and exporters at a time when ports in Dubai and Abu Dhabi have been sidelined by Iran’s threats against shipping through the Strait of Hormuz. Muscat’s approach of maintaining dialogue with all actors means it is also able to mediate with both Iran and Yemen’s Houthis.

Strategic independence

The flurry of diplomatic activity may be a sign of closer coordination between the UAE and its neighbours on some critical issues, but that does not necessarily herald a sea change in its approach.

Speaking at the UN General Assembly in New York on 28 September, Minister of State Khalifa Shaheen Al-Marar reviewed the crises in Iran, Sudan, Gaza, Ukraine and elsewhere and said “the importance of developing and reforming regional and international multilateral institutions … remains paramount” – but while he name-checked the UN, he did not mention the GCC.

It is also notable that the UAE has not yet joined either of the two security initiatives launched by Saudi Arabia during the summer: a maritime defence alliance designed to protect shipping in the Red Sea, or a mutual defence pact that Riyadh signed with Turkiye and Pakistan.

In his speech to the UN, Al-Marar listed what he saw as the main pillars of the UAE’s national strength: “strategic independence” was the first item in his list.

https://image.digitalinsightresearch.in/uploads/NewsArticle/20435670/main.gif

Dominic Dudley
Abu Dhabi mends fences with Riyadh
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Ongoing political turmoil in the region may be prompting Abu Dhabi to review its approach to key diplomatic issues, not least its relations with its larger neighbour, Saudi Arabia.

In late September, UAE Vice-President Sheikh Mansour Bin Zayed Al-Nahyan travelled to Riyadh for talks with Crown Prince Mohammed Bin Salman and Defence Minister Prince Khalid Bin Salman. Such visits may have been commonplace in the past, but over the past year they have been relatively rare, given the friction between the two Gulf powers over issues such as the conflict zones of Yemen and Sudan, relations with Israel and economic rivalry.

At the start of the year, the UAE retreated from Yemen under pressure from Riyadh, after the UAE-backed Southern Transitional Council made rapid territorial gains at the expense of Saudi-backed groups and advanced close to the kingdom’s southern border.

Since then, against the backdrop of the Iran war, relations have shown further signs of strain, with cross-border financial transactions reportedly being blocked or delayed.

However, there have been intermittent attempts to present a more collegial relationship, such as in July, when a photo emerged on social media of Sheikh Mansour and Prince Khalid posing with their arms around each other, reportedly while on holiday in Europe.

Yemen dynamics

Gains by another group in Yemen may lie behind the latest rapprochement between Riyadh and Abu Dhabi. The visit by Sheikh Mansour on 29 September came in the wake of significant advances by the Houthis, who had recently captured Mokha port and strategically significant areas of land overlooking the Bab El-Mandeb Strait – heightening their ability to menace passing ships.

Saudi Arabia has been leaning on its allies – particularly Pakistan and Turkiye – to support its campaign against the Houthis. It is unclear whether the UAE would be willing to get involved militarily in Yemen again, or whether Riyadh would be happy for it to do so, but it could still be a useful ally in the fight. Analysts have noted that UAE-backed forces have, over the years, had a far greater record than anyone else of scoring battleground victories against the Houthis.

It is also notable that Mansour’s delegation to Riyadh included several senior security officials, including Ali Bin Hammad Al-Shamsi, secretary general of the Supreme Council for National Security; Ali Saeed Matar Al-Neyadi, chairman of the National Emergency, Crisis and Disaster Management Authority; and Nasser Humaid Al-Nuaimi, secretary general of the Tawazun Council for Defence Enablement.

The visit was a surprise, given the GCC states’ lack of unified action this year amid the crises in Yemen and Iran. Speaking at an event in Washington in mid-September, Bernard Haykel, professor of Near Eastern Studies at Princeton University, noted that: “Despite the fact that [the GCC states] all face a common threat in Iran and its proxies, you still don’t see real coordination between them. You still have these differences between the Saudis and the UAE, for instance; you have differences between the Qataris and the UAE. If anything would have united them, this would be it. And you don’t see that kind of unity.”

Writing for the Arab Gulf States Institute in early October, Kristian Coates Ulrichsen, a Baker Institute fellow for the Middle East at Rice University, said Mansour’s visit to Riyadh in late September was “likely meant to signal that the thaw [in bilateral relations] was real” and “designed to enable a more coordinated approach to managing the forces ranged against the Houthis in southern and central Yemen”.

Further signs of warming ties came on 8 October, when UAE Investment Minister Mohamed Hassan Alsuwaidi signed a memorandum of understanding with Saudi Industry and Mineral Resources Minister Prince Abdulaziz Bin Salman covering power grid interconnections, trade in electricity and freight rail connectivity.

On the same day, the Saudi ambassador to the UAE invited President Sheikh Mohamed Bin Zayed Al-Nahyan to attend a GCC-EU Summit in Saudi Arabia later in the month.

Sheikh Mansour was not the only senior Emirati on diplomatic manoeuvres in recent weeks. The day after the vice-president was in Riyadh, national security adviser Sheikh Tahnoun Bin Zayed Al-Nahyan was in Muscat for talks with Sultan Haitham Bin Tariq Al-Said.

Oman is a critical partner for the UAE in several areas. Omani ports have provided a trade lifeline for Emirati importers and exporters at a time when ports in Dubai and Abu Dhabi have been sidelined by Iran’s threats against shipping through the Strait of Hormuz. Muscat’s approach of maintaining dialogue with all actors means it is also able to mediate with both Iran and Yemen’s Houthis.

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The flurry of diplomatic activity may be a sign of closer coordination between the UAE and its neighbours on some critical issues, but that does not necessarily herald a sea change in its approach.

Speaking at the UN General Assembly in New York on 28 September, Minister of State Khalifa Shaheen Al-Marar reviewed the crises in Iran, Sudan, Gaza, Ukraine and elsewhere and said “the importance of developing and reforming regional and international multilateral institutions … remains paramount” – but while he name-checked the UN, he did not mention the GCC.

It is also notable that the UAE has not yet joined either of the two security initiatives launched by Saudi Arabia during the summer: a maritime defence alliance designed to protect shipping in the Red Sea, or a mutual defence pact that Riyadh signed with Turkiye and Pakistan.

In his speech to the UN, Al-Marar listed what he saw as the main pillars of the UAE’s national strength: “strategic independence” was the first item in his list.

https://image.digitalinsightresearch.in/uploads/NewsArticle/20432716/main.gif

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ALSO READ: Adnoc signs energy agreements with Japan and South Korea

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Indrajit Sen

Fibrex wins $217m Abu Dhabi Seamont residences contract

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Abu Dhabi-based real estate developer Royal Development Holding, a subsidiary of Emirates Stallion Group, and local firm Saas Properties awarded the contract.

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

Industry and logistics drive development at Neom; Saudi Arabia’s investment priorities realign amid conflict; MEED’s 2026 power developer ranking.

Distributed to senior decision-makers in the region and around the world, the October 2026 edition of MEED Business Review includes:

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Yasir Iqbal

Dubai picks contractor for Al-Maktoum airport terminal

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Dubai Aviation Engineering Projects (DAEP) has selected a contractor for an estimated AED10bn ($2.7bn) substructure package for the West Terminal, as part of the first phase of the $35bn expansion of Al-Maktoum International airport.

A joint venture of Beijing-headquartered China Civil Engineering Construction Corporation (CCECC) and Abu Dhabi-based Tristar Engineering & Construction will execute the contract.

According to a description on DAEP’s website, the expanded airport’s West Terminal will be a seven-level facility spanning 800,000 square metres, with annual capacity for 45 million passengers.

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In July, MEED exclusively reported that DAEP had awarded an estimated $1.5bn contract to a joint venture of Japan’s Mitsubishi Corporation and Indian contractor Larsen & Toubro for the APM system.

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Upcoming awards

In June 2026, DAEP said it will award construction contracts worth over AED55bn ($15bn) for Al-Maktoum International airport by the end of the year.

At the time, DAEP said the planned awards included substructure works for the West Terminal, the fourth aircraft concourse and the baggage-handling system. The programme also included superstructure works for the West Terminal and the first, second and third aircraft concourses.

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DAEP also plans to award façade and roofing packages in 2026.

The Dubai Government approved updated designs and timelines for its largest construction project in April 2024. In September 2024, MEED exclusively reported that a team comprising Austria’s Coop Himmelb(l)au and Lebanon’s Dar Al-Handasah had been confirmed as lead masterplanning and design consultants for the Al-Maktoum International airport expansion.

Construction of the airport is planned in three phases. Once complete, the airport will cover 70 square kilometres south of Dubai and include five parallel runways and 430 aircraft gates.

It will be five times the size of Dubai International airport and is planned to have a passenger-handling capacity of 260 million passengers a year – the largest in the world. For cargo, it is planned to have the capacity to handle 12 million tonnes a year.