The total defense expenditure of Middle East and North African (MENA) countries rose 11% in 2001 from $60.7bn in 2000 to $67.4bn on the back of high oil prices in the second half of 2000 and early 2001, according to The Military Balance 2002-2003 published by the International Institute for Strategic Studies (IISS) in London. The Palestinian intifada that started in September 2000 and events following the 11 September attacks on the US have no doubt played their part in pushing military spending up after a fall of 2.8% in 2000 (MEES, 12 November 2001). With that volatility continuing into 2002 and uncertainty surrounding possible US action against Iraq, there will be pressure to maintain or even increase military spending in the region further this year. This will leave regional governments with hard decisions as they strive to balance their defense needs with other urgent requirements such as job creation.

According to the report, the defense budgets of all the countries in the MENA region rose between 2000 and 2001, apart from Morocco and Jordan, where budgets fell 7.1% and 4.7% respectively. Defense budget figures for Libya, Iraq and the Palestinian Authority were not available. Actual defense expenditure also rose between 2000 and 2001 for all countries except Jordan, Morocco, Lebanon and Iraq. In Jordan actual expenditure fell from $792mn in 2000 to $740mn in 2001, in Morocco spending fell from $1.43bn to $1.32bn, and in Iraq estimated military spending fell from $1.4bn to $1.37bn, while Lebanon registered a fractional decline of just $2mn. The largest increases in defense expenditure were seen in Kuwait (36.1%), Oman (34.9%), Saudi Arabia (21.0%), Iran (18.7%) and Israel (9.1%).

Saudi Arabia continued to be the largest regional spender on military defense. It spent a total of $24.27bn in 2001, more than twice as much as Israel, the second highest spender in the MENA region, which spent $10.38bn. Kuwait is the third highest spender ($5.03bn) followed by Iran ($4.70bn), Egypt ($4.32bn), Algeria ($3.15bn) and the UAE ($3.07bn). This compares to figures for NATO members such as France ($32.91bn), Italy ($20.97bn), the UK ($34.71bn) and the USA ($322.37bn). Total military spending for the MENA region in 2001 was $67.36bn out of a global total of $835.24bn.

Defense budget figures for 2002, like the figures for 2001, show an upwards trend, although Egypt, Oman and Kuwait forecast a decline in spending. As the figures show, however, actual expenditure is often not restricted to budget forecasts. Egypt, Iran and Kuwait amongst others overspent their budget forecasts in 2000 and 2001, and in the current regional environment, they may do the same in 2002. Saudi Arabia’s defense budget for 2002 rose to $21.3bn, 3.4% higher than the 2001 budget.

MENA Military Defense Expenditure

($Mn – Constant 2000 $)

In Israel, the conflict with the Palestinians has placed serious strain on the country’s economy. Not only did GDP fall by about 5% in 2001, but military spending has increased as Israel has mobilized its forces to reoccupy large parts of the West Bank and Gaza Strip. For example, the call-up of 25,000 reservists in early 2002 will cost about $128mn a month, according to the IISS. The Israeli defense budget for 2002 was originally scheduled to increase by $800mn above its 2001 level to $11bn, but due to the delay in passing the budget the additional funds could not be allocated. The budget was therefore set at $8.87bn, but was subsequently increased to $9.4bn, 20.4% of the national budget. The Israeli economy will continue to be squeezed by the need to increase military spending. Other areas of government spending will have to take cuts to pay for defense, and the situation is exacerbated by lower tax revenues as a result of the country’s economic problems. Ratings agencies have also downgraded Israel’s sovereign rating, which will make government financing more expensive.

Despite these budget problems and increased defense costs, however, Israel has been able to enhance its military hardware over the past year. Israel is seeking to deploy Arrow 2 anti-ballistic missile batteries to counter the potential threat from improved Syrian and Iranian missile capability, Merkava 4 main battle tanks have been added to the ground forces, the air force has received additional F-16Is and the US is supplying Israel with 228 Joint Direct Attack Munitions (JDAMs) to provide an improved means of delivering existing stocks of 450 and 900kg bombs.

Iran increased its defense budget from $2.8bn in 2001 to $4.1bn in 2002, although actual expenditure in 2001 was $4.70bn (68% over budget). Relations with the US, while never easy, were particularly strained by US President Bush’s inclusion of Iran in his ‘axis-of-evil.’ The situation was not improved by indications of Iranian involvement in the Israel-Palestine conflict, said the IISS. Of particular concern to the US, however, has been cooperation between Iran and Russia. Following the March 2001 accord between Iranian President Mohammad Khatami and Russian President Vladimir Putin the two countries have signed a military technical cooperation agreement under which Russia plans to sell arms to Iran. The report says that Iran plans to spend some $10bn over the next 10 years to re-equip its armed forces, and the agreement with Russia will account for up to $4bn of this. Although details of the deal have not been revealed, it is thought to include air-defense missile systems, anti-tank guided weapons and battlefield missile systems. Iranian development of nuclear power facilities at Bushehr using Russian expertise has also worried the US, despite assurances that spent fuel will be returned to Russia for disposal, and Russia has refused to curtail its involvement in Iran’s nuclear projects. 

The members of the Gulf Cooperation Council (GCC) announced in December 2001 their intention to forge the much-debated integrated defense policy including the expansion of the alliance’s joint defense force, Peninsula Shield . The force is expected to consist of 5,000 to 20,000 troops and the focus is on creating a joint command, control and communication system. The first phase of the $160mn project has been completed and construction of new facilities has begun at Hafr al-Batin in Saudi Arabia near the Iraqi border. Meanwhile, Saudi Arabia received the first of three new frigates in July 2002, Oman has ordered Super Lynx helicopters to patrol its territorial waters, and the UAE is improving its surface capabilities with six Baynunah PFM ordered from France and its amphibious capabilities with an order for 12 landing craft.

Kuwait, which overspent its 2001 budget of $4.1bn by some 23%, has confirmed its intention to buy 16 Boeing AH-64 Apache attack helicopters and associated systems, following a review last year which put all major acquisition programs on hold. The purchase, which is worth some $2.1bn according to the IISS, is yet to receive approval from the US Congress, however. Kuwait has also made progress with its plans to buy two low-level air-defense systems from Egypt to bolster the five Amoun air-defense systems it bought from Egypt in 1988, which are now thought to be in poor condition.

MENA Military Defense Expenditure - Per Capita And % Of GDP

Egyptian military spending was a cause for concern to Israel, says the report, due to its request to purchase 53 Boeing RGM-84L Harpoon Block II medium-range anti-ship missiles being approved by US Congress. The contract is valued at $255mn and Israel viewed it as a threat because the missiles could potentially be adapted to land-attack capability. However, following an unprecedented 15 meetings, said the IISS, the US Defense Security Cooperation Agency announced that the missiles would be modified to prevent any reconfiguration.

In Yemen, despite a poor economic outlook, the government continues to sign major weapons deals. In October 2001 it signed a deal for 15-24 MiG-29s and an upgrade of some of its existing aircraft to the same standard at an estimated cost of $430mn.

© Copyright MEES 2004.