The Market Dynamics in the UAE Defense Industry

Aerospace and Defense Review | Monday, February 20, 2023

Modernization of the UAE Armed Forces and counterinsurgency and antiterrorism initiatives drive Defense expenditures.

FREMONT, CA: The United Arab Emirates (UAE) Defense Market Size and Trends, Budget Allocation, Regulations, Key Acquisitions, Competitive Landscape, and Forecast, 2023-2028 research forecasts the market size and growth rate for the next five years. The study includes an analysis of the industry's key market drivers, upcoming technological developments, and the most significant obstacles market participants face. In addition, the report provides insights into the critical drivers and government programs anticipated to influence the demand for military platforms over the projected period.

The UAE's engagement in the Yemen civil war, in support of its ally Saudi Arabia, drove the increase in defense expenditures over the above period. The UAE's defense expenditures increased by 0.4 percent CAGR from 2019 to 2023. The UAE's defense spending dropped to $19.8 billion in 2020 after most of its forces were evacuated from Yemen and COVID-19 emerged. Despite this, the country's defense expenditures will reach $23.2 billion in 2023 due to the requirement to finance acquisitions. The nation must set aside sufficient funds to finance the acquisition of 80 Rafale jets and KM-AM surface-to-air missiles at $19.0 billion.

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Although the UAE ended its military engagement in Yemen in 2019, it is still expected to invest in counterinsurgency and antiterrorism measures.

During the past decade, the UAE's defense modernization projects demonstrate its priority on maintaining a robust independent defense posture. Consistently listed as one of the top defense spenders in the region, the nation has collected a large quantity of sophisticated military hardware. C4ISR, anti-ballistic missile systems, fighter aircraft, and armored vehicles, among others, are the primary focus of the country's defense modernization initiatives.

What are the military doctrines and defense policies of the UAE?

The UAE has implemented a policy of strategic hedging against Iran, despite perceiving Iran as its principal regional strategic threat. The country has maintained a transactional relationship with Iran, including diplomatic and business contacts while establishing and bolstering its security alliances with the United States and neighboring Saudi Arabia. The primary objective of this approach has been to avoid an all-out conflict with Iran.

The UAE increasingly views its security alliances and strategic collaborations with Western global powers like France, the U.K., and the U.S. as the foundation of its security policy. Throughout the years, the government has signed numerous defense accords with its Western allies and even let them keep a significant military presence on its soil. Nonetheless, due to the necessity to maintain strategic autonomy, the country's reliance on Western security cooperation has been balanced by its greater desire to train a modern military force. This shift in strategic thinking is evidenced by the quick increase in Emirati military actions in countries like Libya, Afghanistan, Yemen, and Syria, which imply a more forceful military stance.

Which industries dominate the UAE's defense market?

Principal defense market sectors in the UAE include missiles and missile defense systems, military infrastructure and logistics, military fixed-wing aircraft, military rotorcraft, military simulation and training, military crewless ground vehicles, and navy vessels and surface combatants.

The UAE defense market for fixed-wing military aircraft

The sale of military fixed-wing aircraft dominates the UAE's defense market. Airpower has played a crucial part in Emirati military engagements in recent years. The country's air force has fought against insurgents in Yemen, Syria, and Libya. Given the increased emphasis on developing comprehensive expeditionary warfare capabilities, the country is projected to expand its expenditure on acquiring new tanker aircraft.

Military logistics and infrastructure in the UAE military market

The infrastructure and logistics of the military are the second largest segment of the Emirati defense business. The need to protect the UAE's strategic interests in the Middle East motivates its military investment in infrastructure and logistics. The nation's military interventions abroad will lead to construction of new strategic military bases abroad to protect its strategic interests.

The UAE defense market for missiles and missile defense systems

It is anticipated that missiles and missile defense systems will be the third largest industry in the UAE. The UAE has contracted the United States to provide the Patriot Missile Defense System. The nation now employs nine batteries of the Patriot Missile Defense System and two batteries of Theatre High Altitude Area Defense (THAAD) systems for air defense. Yet, the aerial UAV attack on Saudi Arabian oil processing facilities in Abqaiq and Khurais has proven the extreme danger posed by rogue UAV systems to the UAE. Thus, the nation's acquisition of anti-aircraft systems remains a top priority, and anti-air missiles constitute the largest subsegment.

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