Nuclear deal or not, Tehran is keeping its ballistic missiles. And American firms are betting on a buyer’s market in the Persian Gulf.
Major U.S. defense contractors stand to earn a windfall if President Barack Obama’s administration secures a nuclear deal with Iran that sends jittery, oil-rich Persian Gulf countries seeking advanced new weapons. But the contractors likely will also do just fine if the negotiations unexpectedly collapse.
Fueling the coming spending is a controversial provision in the framework agreement, struck in April between Tehran and world powers, that largely left Iran’s ballistic missile capabilities untouched in the ongoing negotiations. The move angered White House critics on Capitol Hill and in parts of Europe. More urgently, it left Gulf states like Saudi Arabia and the United Arab Emirates (UAE) particularly uneasy because they are well within range of Iran’s increasingly advanced ballistic missiles.
That means deal or no deal, the Gulf countries — already some of the world’s biggest weapons buyers — will be opening their wallets even wider in the years ahead.
American defense contractors have long recognized the lucrative opportunity in the region, and they are counting on increased weapons sales to the Middle East to counteract a U.S. market that has slowed due to the relative flattening of the domestic defense budget.
At defense giant Lockheed Martin, Chief Executive Officer Marillyn Hewson wants the company to boost its foreign sales to about 20 percent of the firm’s revenues by the end of 2015, up from 17 percent currently. Most of that growth is expected to come from its sales of missile defense systems. The company already sells about $8 billion in missiles and fire controls annually, with close to half going to America’s allies in the Middle East, Asia, and Europe.
“With the regional instability that’s going on [in the Mideast], we’ve seen a fairly large appetite for a layered air-defense capability,” said Joe Garland, vice president of international business development at Lockheed Martin Missiles and Fire Control.
In an attempt to deepen ties in the region, Lockheed in December set up what it has dubbed the Center for Innovation and Security Solutions in Abu Dhabi, UAE. Garland described it as an effort to collaborate with the UAE on “what type of systems they want to develop for their security,” while exploring new ideas for working with allies in the region.
It is not the number of deals that drives up profits, but the huge cost of fielding just a few systems. Over the past several years, the UAE has signed $1.9 billion in deals to buy two of Lockheed’s Terminal High Altitude Area Defense (THAAD) anti-ballistic missile systems. Qatar and Saudi Arabia, meanwhile, also are reportedly working to acquire the mobile, truck-mounted firing system, as well as an associated radar made by Raytheon.
Last year, an estimated 10 percent of Raytheon’s $23 billion in global sales went to the Middle East. The company has sold billions of dollars’ worth of Patriot missile systems to Israel, Saudi Arabia, Kuwait, Qatar, and the UAE, along with multiple big-dollar follow-on contracts for maintenance work and a constant stream of upgrades. The company booked a $2 billion sale of Patriots to Saudi Arabia this year.
The Saudi military joined a select club of countries that have deployed the Patriot missile in combat, knocking down a Scud missile fired over the border by Houthi rebels in Yemen this spring.
Raytheon officials declined to comment for this story. But in April, CEO Thomas Kennedy said international business amounted to 28 percent of the company’s revenues for the first quarter of 2015.
Those numbers should go up in coming years, regardless of the outcome of the Iran negotiations. Foreign Policy." style="box-sizing: border-box; margin: 0px; padding: 0px; border: 0px; font-family: Tiempos, Georgia, serif; font-stretch: inherit; line-height: 32.7999992370606px; font-size: 17px; vertical-align: baseline;">“The Saudis and Emiratis don’t trust the deal, no matter what the deal is,” Grant Rogan, CEO of Blenheim Capital and a military sales expert, told Foreign Policy. He predicted more sales of Patriot missiles and advanced radar systems “happening in Saudi substantially faster if there’s no deal — or if it’s a deal that doesn’t defang Iran.”
The expected surge won’t make a huge difference on the ground right away, since missile defense systems take years to contract and produce. But as they wait for the expected deals to go through, the six countries that make up the Gulf Cooperation Council (GCC) have started to talk about pooling their missile defense and surveillance assets into a shared network to gain a clearer picture of what is flying through the region’s airspace.
But it is very much a work in progress.
“The problem there has been a political one,” said Thomas Karako, senior fellow at the Center for Strategic and International Studies. Following a May summit of GCC leaders in Washington, the Gulf nations issued a hopeful joint statement for progress on the network they described as a regionwide early-warning system — ostensibly as a safeguard against Iran.
Yet real questions remain over the Gulf states’ ability to overcome deeply entrenched political issues that have previously kept them from sharing intelligence. There’s also the issue of long-term technological investment. Building a networked radar and missile system is not merely about putting interceptors in the desert and pointing them toward the sky. “It’s about stitching those assets together and stitching the networks together,” Karako said.
Currently, there is no regionwide shared system to ensure that incoming attacks or other errant airspace objects aren’t missed. And that raises the overall threat for the Gulf nations.
Lockheed has “talked to a number of these GCC countries about how we can help them tie together” missile defense assets, Garland said. “It’s not there yet.”
While talk of selling more missile defense systems to the Middle East may seem a relatively easy way to blunt the Iranian missile threat, Washington should be cautious about how it balances its priorities.
Kingston Reif, director for disarmament and threat reduction policy for the Arms Control Association, said focusing too much on Tehran’s missiles ignores the true range of threats posed by Iran.
“To the extent that the U.S. [is] considering increasing arms sales, it should be focused on things like cyber and greater coordination on countering cyberthreats, which we know Iran is capable of,” Reif said.
But anti-ballistic missile systems are, to some degree, easier to sell to Gulf allies than other military weapons. The Defense Department has so far ruled out selling F-35 fighter jets, for example, since that would rile Israel and upset the qualitative military edge that Washington, by law, affords its staunchest ally in the region.
The growing distrust among some Gulf allies of Washington’s tentative agreement with Iran also risks changing the nature of some U.S. relationships in the region. Saudi Arabia’s bombing campaign against Houthi rebels in Yemen and airstrikes by both Riyadh and the UAE against jihadis in Libya are two examples of attacks launched without either Washington’s support or prior knowledge.
But the relationship will likely fray only so much, no matter the outcome of the eleventh-hour talks in Vienna between world powers and Iran. Saudi Arabia and other Gulf allies have suggested turning to France and even Russia for future arms, but the American defense industry, as well as Washington’s economic clout, still matters.
Following the May summit, GCC Assistant Secretary-General Abdel Aziz Abu Hamad Aluwaisheg told reporters the meeting “exceeded the expectations of most of us” in that it reasserted Washington’s commitment to Gulf security and containing Iran.
Obama assured Gulf states that a nuclear deal with Iran doesn’t reflect a “pivot” toward Tehran, Aluwaisheg said.
Obama “succeeded very well in putting those questions to rest,” he said.
At the same time, the Gulf is not about to let its guard down. Because Iran already fields a ballistic missile capability that has largely been left outside the nuclear negotiation process, any deal — or lack of a deal — still leaves a serious threat in place.
“Missile defense will continue to grow in the region, regardless,” Rogan said.
Photo credit: Atta Kenare/AFP
(Lanka-e-News -28.June.2015, 7.00PM) The secretary to parliamentary affairs of former M.P. Ven. Athureliya Rathane Thera ,who is also the Pivithuru Hetak organization leader cum presidential advisor, along with constable Weerakody of the intelligence unit (CIU ) of the CID and four others were arrested yesterday early morning (27) on charges of possession of the drug ‘ecstasy’ more dangerous than heroin! The JHU which talks most loudly against drugs obviously is moving heaven and earth to suppress this incident.
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