With Abu Dhabi's hotels enjoying their biennial International Defence Exhibition (IDEX) bonanza this week, the global arms fair meant every room in the emirate was booked up months ago. IDEX has grown over the last 12 years to become one of the biggest and most prestigious military fairs in the world. This year was no exception, with more than 900 exhibitors from 50 countries taking part - and all the top international firms vying for a share of the region's vast defence budgets.
The growth and success of IDEX reflects the importance of the Gulf market to the defence industry. Since the first Gulf war in 1990-91, the wealthy oil states of the region have been engaged in a high-speed, hi-tech arms race, as they seek to ensure their security against both external and internal threats. In the last eight years, the six nations of the Gulf Cooperation Council (GCC) - Bahrain, Kuwait, Oman, Saudi Arabia, the UAE and Qatar - have spent $277bn on defence and security systems, equivalent to 12.7% of their GDP during the same period. This is the highest ratio of defence spending anywhere in the world.
Whilst Saudi Arabia continues to have the biggest appetite in the region, spending some $18.4bn on defence in 2003 alone, the UAE's spending has dropped off slightly in recent years. The country bought most of its major systems in the 1990s, when it was allocating almost 30% of its total expenditure to defence. Giat Industries signed a $3.5bn deal in 1993 to provide almost 388 Leclerc main battle tanks, whilst another French company, Dassault also won a lucrative contract in 1998, providing and upgrading the UAE's Mirages. By far the biggest defence deal, worth $6.4bn, was signed in May 2000 with Lockheed Martin. The contract, to provide 80 F-16s to the UAE air force, is set to run until final deliveries are made in 1997. Meanwhile, the country's naval capacity will be increased by the Baynunnah programme, a $776m collaboration between Abu Dhabi Ship Building and a French design company for six 88-metre light multi-role corvettes.
With these major purchases still being delivered, there are few big deals to be done and procurement patterns have switched to a greater emphasis on upgrades, training and logistics equipment. Nonetheless, the surge in oil prices over the past two years has meant the UAE is still very much in the market for equipment of the highest specifications. It may not be spending as much as it was, but it remains an important customer: almost $400m worth of contracts have been awarded at this year's IDEX, with more expected to follow.
The biggest contract - worth $144m - was awarded to Germany's Rohde & Schwarz GmbH for upgrading and improving the UAE Armed Forces' communications systems. The Italian firm Bell/Augusta Aerospace won a $71m contract for developing and maintaining helicopters. Other contracts for electronic equipment were awarded to firms from South Africa, France and across Europe, while firms from within the UAE's own fledgling defence industry were also favoured.
The UAE's procurement patterns reflect the considerations of a country that simply does not have the manpower to repel a full-scale invasion on its own. Decisions are made on both a military and political basis. Militarily the UAE seeks to equip itself with the very latest detection and deterrent technologies - the country is now arguably the region's strongest air power. But in maintaining such diversity of defence sources, the country also ensures the protection of powerful international friends, in particular the US, Britain and France - a need that may prove expedient with its chief guarantor, the US, looking increasingly stretched.
The growing threat from international terrorism and Islamic insurgency is also affecting the region's defence spending. The overthrow of Saddam Hussein removed from the scene the original catalyst for militarisation in the Gulf. Recent missile procurements in Iran are being eyed cautiously, but conventional threats seem to be diminishing. However, with insurgents in Iraq carrying out daily attacks, and recent al-Qaida attributed activity in both Saudi Arabia and Kuwait, other countries in the region are taking the terrorist threat seriously. Military experts say that Gulf countries have a growing appetite for the latest satellite imagery and advanced surveillance systems. Whilst there have been few major orders in this field so far, it is this sector that is most likely to benefit from the next wave of defence spending.