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
  • Firms prepare bids for NWC sewage treatment package 14

    4 September 2026

     

    At least three contractors are preparing to make offers for package 14 of Saudi Arabia’s long-term operations and maintenance (LTOM) sewage treatment programme, according to sources.

    Known as Eastern A Cluster (LTOM14), the package was tendered by the state-owned National Water Company (NWC) in April, with a bid submission deadline of 30 September.

    The contract covers the upgrade of six existing sewage treatment plants (STPs), with a capacity expansion of 30,000 cubic metres a day (cm/d) at the Al-Jarodia STP.

    This will increase total treatment capacity from about 263,000 cm/d to approximately 293,000 cm/d, with an estimated cost of $180m.

    According to sources, the firms preparing to submit bids include:

    • Alkhorayef Water & Power Technologies (Saudi Arabia)
    • Civil Works Company (Saudi Arabia)
    • Miahona (Saudi Arabia)

    The latest phase follows the formal signing of a $347m contract between NWC and a Saudi-Chinese consortium for Northern Cluster Sewage Treatment Plants Package 10 (LTOM10) on 2 September.

    The same consortium led by United Water (China) is not planning to bid for LTOM14 and is expected to formally sign a contract for LTOM11 in the coming months, a source said.

    In April, MEED exclusively reported that the group had won the contract for package 11, which will have a combined capacity of about 440,000 cm/d.

    It is also understood that Beijing Enterprises, a bidder for North Western B Cluster (LTOM12), is not preparing to bid for package 14.

    In the meantime, the contract for LTOM12 is moving towards award, with bids currently under evaluation.

    The contract covers the construction and upgrade of seven STPs with a combined capacity of about 162,000 cm/d. As previously reported, NWC opened financial bids for the project in April.

    Future phases

    In total, the LTOM programme comprises 19 packages split into two phases. In May 2024, NWC announced it had awarded $2.5bn-worth of contracts in the first phase. Phase two of the programme includes 10 packages covering 117 treatment plants.

    In April, MEED exclusively reported that NWC had held several discussions regarding changes in scope details and potential expansions to upcoming projects. This involved “grouping some upcoming projects”.

    The request for proposals for LTOM13 was subsequently put on hold and it is now understood that this tender has likely been merged with other packages in the programme.

    According to a source, Eastern B Cluster (LTOM15) has also been cancelled and has likely been merged. LTOM15 had comprised two STPs with a total capacity of 152,000 cm/d.

    The next contract to be tendered will be Central Cluster (LTOM16), potentially in November, a source added.

    Under the original scope, LTOM16 covers the construction of 14 STPs with a total capacity of 153,000 cm/d.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/19358188/main.jpg
    Mark Dowdall
  • Egyptian contractor wins Abu Dhabi Ramhan Island deal

    4 September 2026

    Egypt-headquartered contractor Rowad Modern Engineering has been awarded the main works contract for the Marina Apartments project on Ramhan Island, Abu Dhabi.

    The contract was awarded by the local firm Eagle Hills, which is led by Mohamed Alabbar, the founder and chairman of Emaar Properties.

    Rowad’s scope includes structural and architectural works, finishing, and mechanical, electrical and plumbing systems.

    The company will also deliver infrastructure works, including utility connections to external networks, testing and commissioning.

    The development comprises two residential towers offering 187 residential units.

    The works will be carried out under the consultancy supervision of local engineering firm Mirage Leisure & Development.

    The latest contract award follows Eagle Hills awarding the local firm Arabian Construction Company (ACC) an estimated AED2.5bn ($680m) construction contract to build about 500 villas at the Ramhan Island development, as reported by MEED previously.

    Located off the coast of Abu Dhabi, the Ramhan Island development spans an area of over 4 million square metres.

    The overall development includes the construction of 1,800 villas, 900 residences, a hotel and retail facilities.

    Mohamed Alabbar launched the Ramhan Island development in May 2024.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/19355437/main.jpg
    Yasir Iqbal
  • Dubai sets deadline for Jebel Ali waste-to-energy PPP

    4 September 2026

     

    Register for MEED’s 14-day trial access 

    Dubai Municipality has set a 27 September deadline for developers to submit expressions of interest (EOIs) for its planned Jebel Ali waste-to-energy (WTE) public-private partnership (PPP), according to a source.

    The greenfield facility is planned to treat up to 6,000 tonnes of municipal solid waste a day.

    The municipality is seeking international and local developers to develop, finance and operate the facility. It is planning to prequalify developers later this year before issuing a request for proposals (RFP) in the first quarter of next year, a source said.

    The Jebel Ali facility is intended to support Dubai’s waste-management strategy and its target of reducing reliance on landfill.

    Dubai Municipality is being advised by a team led by Abu Dhabi’s Tribe Infrastructure Group, with UK-headquartered Ashurst and Germany’s Fichtner also involved.

    It was confirmed to MEED that the project is separate from the planned second phase of the Warsan WTE facility, for which Dubai Municipality issued a consultancy tender in February.

    That facility will be located in Warsan 2, next to the Al-Aweer sewage treatment plant. The expansion is expected to increase waste-conversion capacity at the existing Warsan site with an estimated budget of $500m. The consultancy contract has a duration of six years.

    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 Warsan project was developed under a 35-year PPP concession by a consortium comprising Dubai Holding, Dubai Aluminium, Tech Group and Itochu Corporation. 

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

    https://image.digitalinsightresearch.in/uploads/NewsArticle/19354502/main.jpg
    Mark Dowdall
  • Egypt to invest $4.5bn in refinery upgrades

    4 September 2026

    Egypt is planning to invest $4.5bn in refinery upgrades, according to the country’s Minister of Petroleum and Mineral Resources, Karim Badawi.

    Egyptian refineries are operating at 80% of capacity compared with 66% two years ago, according to Badawi, who wants further increases in utilisation of existing facilities.

    “We aim to invest around $4.5bn to develop existing refineries and build new units to reduce imports and achieve self-sufficiency in refined products,” he said in a statement.

    In May, Egypt said that it had increased its fuel import budget by almost 40% for the 2026-27 fiscal year amid higher global prices driven by the Iran war, which started when the US and Israel launched an attack on Iran on 28 February.

    Brent crude prices are up about a third since the conflict started, trading at more than $90 a barrel for most of this month so far.

    Badawi said a decline in Egypt’s oil and gas production between 2021 and 2024 occurred because foreign companies were reluctant to invest in the country’s energy sector due to unpaid government debts.

    He said: “We have settled all the debt, which reached $6.1bn in June 2024. As a result, hydrocarbon exploration and production activity grew by nearly 20% this year.

    “We are now moving in the right direction to increase oil and gas output gradually.”

    Despite the ongoing push to develop projects in the country’s oil and gas sector, several key projects have seen significant delays in recent years.

    These include a $2bn hydrocracking complex package that forms part of the wider Assiut oil refinery upgrade project.

    Earlier this month, MEED revealed that mechanical completion of the hydrocracking package is now unlikely to be reached until early next year due to complications in the final stages of construction.

    The hydrocracking complex package has experienced extensive delays over several years.

    In April this year, Badawi called for work to accelerate on the Assiut oil refinery upgrade project, saying it is important for reducing the country’s spending on imported refined products.

    At the time, the oil ministry said the project was 88% complete, with trial operations planned by the end of the year.

    Assiut Oil Refining Company (ASORC), a subsidiary of state-owned Egyptian General Petroleum Corporation, is the project operator.

    France’s Technip Energies is the main contractor, performing engineering, procurement and construction work on the Assiut hydrocracking complex under a $2bn contract awarded by ASORC in February 2020.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/19353521/main.jpg
    Wil Crisp
  • North Field West platform bidders get extra time

    4 September 2026

     

    QatarEnergy has granted contractors additional time to prepare bids for a key tender for the engineering, procurement, construction and installation (EPCI) of large platforms for the giant North Field gas field in Qatari waters.

    The tender, issued earlier this year, forms part of the wider North Field West (NFW) project, the third and last phase of the state enterprise’s North Field liquefied natural gas (LNG) expansion programme.

    The core scope comprises the EPCI of four production deck modules (PDMs) and associated structures. The new PDMs will increase gas production from North Field reservoirs and provide additional gas feedstock for the NFW LNG development.

    QatarEnergy has set 15 September as the deadline for technical bid submissions, while commercial bids are due on 10 November, according to sources.

    The previous deadlines for submission of technical and commercial bids were 30 August and 25 October, respectively, MEED previously reported.

    The following contractors, among others, are understood to be bidding:

    • China Offshore Oil Engineering Company (China)
    • Larsen & Toubro Energy Hydrocarbon (India)
    • McDermott (US)
    • Saipem (Italy)

    Before issuing the PDM tender, QatarEnergy awarded McDermott a contract for the EPCI of four offshore jackets that will also support gas feedstock supply for the NFW LNG project. The contract is estimated to be worth about $200m, MEED reported in January.

    North Field LNG expansion

    QatarEnergy is advancing the three phases of its estimated $40bn North Field LNG expansion project. EPC works on all three giant projects are progressing.

    QatarEnergy is understood to have committed nearly $30bn to the first two phases – North Field East (NFE) and North Field South (NFS) – which will lift Qatar’s LNG production capacity from 77.5 million tonnes a year (t/y) to 126 million t/y by 2028.

    QatarEnergy awarded the main EPC contracts for NFE in 2021. The project was intended to raise LNG output to 110 million t/y by 2025. The $13bn EPC package – covering the EPCI of four LNG trains, each with a capacity of 8 million t/y – was awarded in February 2021 to a consortium of Japan’s Chiyoda and France’s Technip Energies.

    In May 2023, QatarEnergy awarded the $10bn main EPC contract for NFS to a consortium of Technip Energies and Consolidated Contractors Company (CCC). The contract includes two LNG trains, each with a capacity of 7.8 million t/y.

    Once fully operational, the first two phases are expected to add 48 million t/y of LNG supply to the global market.

    QatarEnergy took the final investment decision on NFW this year, awarding an EPC contract estimated at $8bn to a joint venture comprising Technip Energies, CCC and Gulf Asia Contracting (GAC) in February.

    Chiyoda carried out the front-end engineering and design (feed) work for the NFW LNG project.

    The NFW scope covers the EPC of two LNG trains with a combined capacity of 16 million t/y, as well as associated facilities for gas treatment, natural gas liquids recovery and helium extraction.

    In addition to LNG, NFW is expected to produce about 175,000 barrels of oil equivalent a day of condensate, ethane and LPG.

    With all three phases now under EPC execution – and NFE scheduled for commissioning later this year – QatarEnergy is positioning itself to remain one of the world’s largest LNG suppliers over the long term.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/19352006/main.jpg
    Indrajit Sen