Amid Russia’s ongoing conflict with Ukraine and tensions in the Middle East, Taiwan Strait and elsewhere, global military expenditure increased 6.8% to reach $2.4trn in 2023 – the highest level ever recorded by the Stockholm International Peace Research Institute (SIPRI). Saudi Arabia allocated approximately $75.8bn to its military that year, marking a 4.3% increase from 2022. This expenditure represented 7.1% of the country’s GDP, the fourth-highest percentage globally, after Ukraine (37%), Lebanon (8.9%) and Algeria (8.2%). The Kingdom ranked fifth globally for overall military spending in 2023. As one of the world’s top-10 military spenders, Saudi Arabia’s defence budget accounted for 24% of total government outlay in 2023.
According to figures from SIPRI, in 2023 Middle Eastern countries – excluding Syria, the UAE and Yemen, for which data was not available – allocated over $155bn to defence. Saudi Arabia’s elevated outlay is primarily financed by oil revenue received, as global markets sought alternatives to sanctioned Russian crude. Investment is prioritised in line with the Vision 2030 goal to localise at least half of defence expenditure by 2030, while that figure stood at nearly 15% as of mid-2023. As of October 2024 negotiations were ongoing between the US and Saudi Arabia, on a deal that could see the US provide the Kingdom with both security guarantees and support for a civilian nuclear programme.
Structure & Oversight
Saudi Arabia’s Ministry of Defence (MoD) is responsible for national security, while its armed forces act under the supreme command of King Salman bin Abdulaziz Al Saud – with operational command entrusted to Crown Prince Mohammed bin Salman bin Abdulaziz Al Saud. As of October 2024 the MoD was led by Prince Khalid bin Salman bin Abdulaziz Al Saud, who was appointed in September 2022 to oversee the five branches of the Kingdom’s armed forces: the Royal Saudi Land Forces, the Royal Saudi Air Forces (RSAF), the Royal Saudi Naval Forces (RSNF), the Royal Saudi Air Defence Forces and the Royal Saudi Strategic Missile Force. A separate unit under the Kingdom’s military forces, the Saudi Royal Guard Command, is tasked with protecting the royal family. Approximately 257,000 troops served across the Kingdom’s military branches as of January 2024, according to US-based military data analytics firm Global Firepower.
Additionally, approximately 125,000 troops serve under the Saudi Arabian National Guard (SANG), which operates under the purview of the Ministry of National Guard. SANG defends the Kingdom’s borders and maintains internal security and stability – particularly of oil fields and related infrastructure. The Presidency of State Security, established in July 2017, is responsible for counterterrorism forces, protecting critical infrastructure and domestic intelligence services. Additionally, the Ministry of Interior (MoI) is responsible for national security, naturalisation, immigration and Customs.
Saudi Arabia’s internal security services market is experiencing rapid digitalisation, including the utilisation of predictive artificial intelligence in crime detection in smart cities and for border security. SANG also targets the integration of unmanned aerial vehicles (UAVs), underscored by a February 2024 deal for Saudi industrial development organisation Elm to localise the production of such systems to respond to chemical, biological, radiological and nuclear attacks.
As such, the cybersecurity solutions necessary to protect this infrastructure are also in high demand, with the market anticipated to reach $11bn by 2032. Indeed, Saudi Arabia was subject to 7.1m cyberattack attempts in the first half of 2023, representing an evolving threat for the National Cybersecurity Authority, the regulatory body responsible for operational cybersecurity since 2017. In 2024 the Kingdom ranked first in the Global Cybersecurity Index in the World Competitiveness Yearbook by the Switzerland-based International Institute for Management Development.
Localisation
Saudi Arabia aims to localise its domestic military industrial capabilities under the General Authority for Military Industries (GAMI) and Saudi Arabian Military Industries (SAMI), the latter of which contracts with foreign companies and has a stated aim of becoming a global top-25 defence firm by 2030. GAMI serves to regulate and license Saudi Arabia’s military industries, while also guiding related policies.
GAMI is the gatekeeper in terms of final approval for military procurement of all defence platforms and services – not just for the MoD, but also for other government agencies, such as the MoI and SANG. This function positions GAMI as a key point of entry for foreign defence contractors. In May 2022 the entity established the National Academy for Military Industries – capable of accommodating 2000 students per year – to help develop the engineering and other technical skills necessary to support the Saudiisation agenda.
Government-owned SAMI was launched by the Public Investment Fund, Saudi Arabia’s sovereign wealth fund, in May 2017 to help the Kingdom become less reliant on foreign military imports. It operates across aeronautics; land systems, including military vehicles; weapons and missiles; and defence electronics, and employed more than 3500 staff as of September 2024. In August 2022 SAMI was cleared to acquire a 51% stake in the Saudi Rotorcraft Support Company, with Boeing retaining the remaining shares. Additionally, in December 2023 SAMI signed an agreement to buy a 10% stake in Alsalam Aerospace Industries from Saudi Advanced Industries.
Since its establishment in September 2021 the General Authority for Defence Development (GADD) has led national defence research, development and innovation endeavours, in line with Vision 2030’s localisation goals. In October 2023 GADD and SAMI combined to launch an SR664m ($177m) grant to assist national development centres and Saudi universities to design and produce defence systems such as software-defined radio systems, and surveillance and reconnaissance systems for anti-UAV defence systems.
Elsewhere, GAMI’s Industrial Participation Programme (IPP) – launched in 2019 as a successor to the Economic Offset Programme – is a cornerstone of Saudi Arabia’s defence localisation strategy. The programme requires foreign defence contractors to contribute to the Kingdom’s domestic industrial capabilities, fostering technology transfer, local production and the development of a skilled workforce. This initiative aligns with the Vision 2030 objective of increasing local content in defence procurement and producing 50% of the Kingdom’s military requirements domestically by 2030.
Under the IPP, international defence organisations are encouraged to invest in local manufacturing, as well as research and development through partnerships with Saudi firms. The programme therefore plays a critical role in enabling the Kingdom to build its domestic defence capabilities while creating opportunities for foreign partners to actively participate in the advancement of the local defence industry.
GAMI focuses much of its localisation drive on landbased systems. Indeed, in February 2023 SAMI inaugurated a land systems industrial park in Riyadh with an eye to boosting localisation. In another notable development, in December 2023 SAMI awarded a $153m contract to Zamil Steel Construction Company to construct a defence manufacturing complex in the governate of Al Kharj that will develop and build armoured vehicles and advanced land-based systems.
Space
The Saudi Space Agency (SSA) – formerly the Saudi Space Commission – is charged with developing the domestic space industry and related capabilities, including through public-private partnerships. The Kingdom’s space sector generated $400m in 2022 and is forecast to become a $2.2bn sector by 2030. In March 2024 Abdullah Alswaha, the minister of communications and information technology, told local media that the government was developing a two-phased space strategy that could boost public and private sector investment in the Saudi space economy. The first phase of the initiative would focus on upstream space exploration, with downstream services in telecommunications, navigation and Earth observation to be explored in the second phase. Additionally, the SSA is expected to establish the Centre for Space Futures in the second half of 2024 to facilitate discussions between public and private entities to advance spacebased research cooperation.
Aviation
The General Authority of Civil Aviation (GACA) is responsible for the regulation of air transport services and the implementation of civil air regulations. In the first half of 2024 Saudi air-passenger traffic rose 17% from the same period of 2023 to reach 62m passengers across 446,000 flights. GACA also oversees airport performance, and it is leading an expansion of Al Ahsa International Airport, the launch of a new additional international departure terminal at Taif International Airport and the introduction of self-flying air taxis. Under its National Aviation Strategy, by 2030 GACA aims to achieve regional leadership by handling 330m passengers each year, increasing air freight capacity to 4.5m tonnes and raising air connectivity to reach 250 destinations to and from Saudi airports.
Defence Cooperation & Development
The target for Saudi Arabia to produce 50% of its military armaments locally is considered a strategic move, addressing the Kingdom’s reliance on US imports and the potential for external factors to affect supply chains. The World Defence Show (WDS) in February 2024 outside of Riyadh offered the chance for Saudi Arabia to demonstrate its progress in terms of reaching its targets. At the show, SAMI presented the Hazem combat management system, produced in partnership with Spain’s government-owned shipbuilding firm Navantia, ahead of its integration with the 104-metre Spanish-made Avante 2200 vessels that are expected to join the Saudi fleet. Meanwhile, the ROAYA series turret system, touted as Saudi Arabia’s first-ever 100% locally developed weapons system, was equipped on armoured vehicles and drones at the event.
These announcements reflect the two-tiered nature of the Kingdom’s defence industry’s advancement. Longstanding partnerships with international organisations, such as US-based Lockheed Martin and Boeing; France’s Airbus Helicopters, Safran Electronics & Defense and Thales; and Singapore Technologies Engineering, are providing opportunities for joint-venture armaments to be produced in the Kingdom. For example, SAMI aims to localise up to 70% of the production of Turkey’s Bayraktar Akıncı UAVs under a strategic partnership signed between Riyadh and Ankara in August 2023. Meanwhile, in-country assembly kits for the BAE Systems Hawk 165 advanced jet trainers used by the RSAF are being supplied from the UK.
Elsewhere, in April 2024 Raytheon Saudi Arabia and GAMI signed a strategic agreement to strengthen the defence industrial ecosystem, revolving around several cornerstone initiatives. These include the exploration of the potential to produce Patriot missile launchers locally with Arabian International Company; the manufacturing of GEM-T missile canisters with Zahid Industries; and the final assembly, integration and testing of GEM-T effectors with SAMI. Progress is also being made as regards local innovation, epitomised by a 2023 deal for Turkey to produce the Saudi-designed Asef-I small vertical take-off and landing drone, led by Saudi Arabia’s Intra Defence Technologies.
Signed Agreements
GAMI reported that the WDS secured deals worth SR26bn ($6.9bn), spread across 17 contracts and two memoranda of understanding (MoUs). These included an agreement for Saudi subcontractors to supply Lockheed Martin’s Terminal High Altitude Area Defence (THAAD) system. In November 2018 the Kingdom agreed to purchase 44 THAAD launchers, 360 interceptor missiles and various other components in a deal worth an estimated $15bn. The first four sites for these systems are set for completion before the end of 2026, with operations on all seven expected to conclude by April 2028. More recently, in February 2024 Italian multinational Leonardo inked an MoU with GAMI that focused on defence and aerospace – including space industry systems; airframe maintenance; repair and overhaul; the localisation of electronic warfare systems and radars; and the assembly of helicopters.
Geopolitics
There has been significant diplomatic activity in recent years as Saudi Arabia has sought to strengthen its defence ties with the US in exchange for broader strategic cooperation domestically and within the region. The Kingdom is reportedly aiming to secure a reliable US security guarantee, while also preserving the flexibility to maintain strong economic and political relationships with important global partners such as China and Russia, both of whom play critical roles in Saudi Arabia’s energy sector. Russia’s cooperation is important for managing global oil prices, while working with China, as the world’s largest oil importer, is essential for sustaining market share.
To date, the US has never entered a mutual defence treaty with a non-NATO member apart from Japan and South Korea. Any such agreement for Saudi Arabia would require approval from the US Senate. Furthermore, obtaining the consent to waive regulations on the export and reprocessing of nuclear materials – measures which the Saudi government views as essential for advancing its civilian nuclear programme – could face challenges in the US Congress.
In March 2024 the US secretary of state, Antony Blinken, announced there had been progress in related talks, which face some challenges, including Saudi Arabia’s continued neutrality regarding the ongoing conflict in Ukraine, and efforts to pursue political and economic relations with Russia and China. As part of any defence pact with Riyadh, the US government may expect the Kingdom to reduce arms purchases and similar technological cooperation with China. A potential Saudi F-35 sale – agreed with the UAE after it ratified the Abraham Accords in 2020 – was under discussion as part of a potential deal as of November 2024.
Aside from traditionally strong military ties with the US, Saudi Arabia also maintains a historical defence relationship with the UK. In February 2024 the Kingdom signed an agreement to explore the development of advanced new weapons systems, including precision-guided missiles and armoured vehicles.
Performance & Public Expenditure
In 2024 Saudi Arabia maintained its 23rd position in Global Firepower’s Military Strength ranking. The index takes into account various factors including quantity of military units, financing and logistical capabilities. UK-based analytics firm GlobalData forecasts Saudi Arabia’s defence expenditure to see a compound annual growth rate of 4.5% over the 2024-28 period, reaching $86.4bn by the end of the period. In 2023 Saudi Arabia committed $75.8bn to its defence budget, a 6.9% increase on the previous year.
This rise in spending is attributed to the continued investment in strategic procurement programmes, including military fixed-wing aircraft, missile-defence systems and naval vessels. For example, in April 2024 Saudi Arabia’s Middle East Propulsion Company, the prime contractor of the MoD, signed a $65.8m maintenance contract with US-based Pratt & Whitney to ensure operational readiness of the RSAF’s fleet of F-15 Eagle fighter jets. Under the agreement, the aerospace manufacturer is expected to provide spare parts and engine services. As the Kingdom is looking to modernise its air-fighting capabilities, manufacturers are looking to capitalise on their fighter jets, with Boeing offering its F-15EX Eagle II, Airbus offering its Eurofighter Typhoon and France’s Dassault Aviation offering its Rafale jets.
The Kingdom’s 2023 military budget funded 19 government bodies, including crucial projects such as the construction of facilities at the King Salman Airbase, the relocation and establishment of the King Faisal Air Academy, and the modernisation of the Ministry of National Guard. US credit ratings firm Fitch Solutions reported that in 2022 Saudi Arabia saw strong demand across multiple segments, including ground and air equipment, naval and air defence capabilities, cybersecurity and rotorcraft capabilities, among others.
Amid concerns that regional tensions could intensify, Saudi Arabia is looking to strengthen its missile defence capabilities to bolster national security and ensure that supply routes in the Red Sea remain unhampered. As such, in February 2024 the Kingdom signed an agreement worth $3.2bn with South Korea’s defence firm LIG Nex1 to purchase 10 Cheongung II batteries – a mid-range, medium-altitude interception system that can cope with ballistic missile and aircraft attacks.
The RSNF is continuing a $20bn Saudi Naval Expansion Programme (SNEP) II, launched in 2018, under which it is modernising its Eastern Fleet. Its aim is to transition from a brown-water to a green-water navy. Under SNEP II, Saudi Arabia aims to acquire corvettes, littoral combat ships and offshore patrol vessels to guard vital shipping routes and maritime resources. The modernisation provides opportunities for defence training contractors, illustrated by the April 2024 signing of a $250m blanket order for US forces to provide training and logistics support to the RSNF.
Outlook
Saudi Arabia’s defence and security industry is primed for expansion on multiple fronts, as the Kingdom is likely to retain the financial power needed to fund its localisation drive. As such, SAMI is increasing its strategic autonomy through a combination of smart joint-venture partnerships with foreign contractors and the consolidation of domestic partners. Industrial cooperation agreements have also been struck with numerous international organisations, which are expected to increase productivity once new domestic defence manufacturing bases open their doors – with the Al Kharj facility expected to launch in 2026 and a helicopter base at Malham set to open in 2024.
Additionally, the deployment of the Hazem combat management system on the new Avante 2200-class corvettes and the showcasing of the ROAYA turret system augurs well for the future rollout of Saudi Arabia’s defence systems. While these have yet to be extensively tested, SAMI continues to work towards establishing a stronger presence in international markets. As the Kingdom progresses towards its localisation targets, there remains significant opportunity for foreign partners to contribute, particularly through collaborations with SAMI and GAMI on land-based systems development.
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