NEW
YORK - The United Arab Emirates (UAE), the center
of a growing controversy over its proposed
management of US port terminals, is one of the
world's most prolific arms buyers and a
multi-billion-dollar military market both for the
United States and Western Europe.
The
energy-rich Persian Gulf nation is currently
taking delivery of about US$8.4 billion worth of
military equipment, mostly state-of-the-art
fighter aircraft, ordered from the US ($6.4
billion) and France ($2 billion) over the past
five years. The delivery of 80 US-
built F-16 E/F fighter planes
- described as one of the biggest single arms
packages to a Middle Eastern nation and finalized
in March 2000 - is to be completed in 2007.
US President George W Bush's threat to
veto any attempts to block last week's deal
permitting a state-owned UAE company to take over
the management of six US port terminals has
underlined the significance of the political and
military relationship between the two countries.
Despite growing bipartisan opposition to
the deal - mostly prompted by a fear psychosis
that US ports should not be managed by a
state-owned Arab company because of possible
terrorist infiltration - Bush says the UAE has
been a strong US ally in the fight against global
terrorism. Despite potential terrorist threats,
the president sees no risk in a Middle Eastern
company overseeing US ports and shipping terminals
.
But an equally significant fact in the
longstanding bilateral relationship is that the
UAE is a vibrant arms market not only for the US
but also its allies in Western Europe,
particularly France and Britain.
"The UAE
[arms] market is definitely important to the US,"
said Tom Baranauskas, a senior Middle East analyst
at the Connecticut-based Forecast International, a
leading provider of defense market intelligence
services. "Just the order for 80 of the
newest-generation F-16E/Fs alone was a major buy
from the US," he said.
"Interestingly,
there are already upgrades planned for these
fighter planes even though they have not completed
delivery," Baranauskas said.
The upgrades
and maintenance of the already delivered aircraft
- and proposed new arms purchases - will be
ensured only by a continued military relationship
between the UAE and the US.
But he also
pointed out that the UAE military's procurement
priorities were shifting, and "this shift may
affect the US competitiveness, and actually
benefit Europeans more than the US".
Besides French Mirage fighter planes, the
UAE has also taken delivery of about 36 British
Aerospace Hawk, 100 trainer/ground attack
aircraft, four warships from Germany and two
frigates from the Netherlands. Additionally,
France has supplied about 400 battle tanks in a
deal worth nearly $3.8 billion.
With an
armed force of only about 50,000 to 60,000 troops,
the UAE is considered one of the world's best
equipped militaries. A country which does not
receive any US military aid, the UAE pays hard
currency for all its weapons purchases.
Projected orders for military equipment
from the US exceeded $650,000 in 2005, with an
anticipated increase to about $1.9 billion in
2006, according to estimated figures released by
the US State Department in early February.
According to Forecast International, the
UAE's military budget for 2006 is estimated at
about $3.7 billion, compared with $20.2 billion by
Saudi Arabia, the Middle Eastern nation with the
largest single defense budget, followed by Israel
($9.9 billion), Iran ($7.9 billion) and Kuwait
($4.9 billion).
A country with the world's
third-largest oil reserves and the fifth-largest
gas reserves, the UAE has a per capita income of
over $17,000, with oil accounting for 30% of gross
domestic product and 75% of national revenues.
The unprecedented rise in oil prices in
world markets - from about $12 per barrel in 1998
to $65 last week - has increased the purchasing
power of countries such as the UAE.
Baranauskas said that "looking at the UAE
inventory of weapons, particularly fighter planes,
it is quite obvious that the Emirates does rely
heavily on the US as a source".
But it is
also obvious that the UAE does not "put all its
eggs in one basket" as evidenced by the
procurement of French and British weapons systems.
"If I had to hazard a guess on the potential
impact of the current imbroglio, there will be
increased interest on the part of the UAE military
to move to further arms source diversification" -
and away from relying too heavily on the US.
"You could already see some UAE
unhappiness over a failed deal to buy Hawkeye
airborne early warning aircraft due to the US
refusal to fully transfer Link-16 secure
communications technology," he added.
The
Europeans traditionally have been more willing to
sell equipment without strictures, and
well-equipped militaries with the wherewithal to
buy high-tech equipment are not going to settle
for systems that cannot be used to their full
capabilities because the US refuses to provide the
full-up version, Baranauskas said.
"Yet,
Israel usually gets such full-up versions. The
double-standard here is noted and duly filed away
in memory, to possibly rebound in a later
competition," he said.
