WASHINGTON — A mix of political and economic upheaval concerns in the Gulf region is driving regional powers to look away from the US for military needs, experts warn.
The US' abrupt withdrawal of military support to Egypt after the Arab Spring, as well as the perceived retreat from the Gulf region, have combined with dropping gas prices and an increasingly strong dollar to give Middle Eastern nations incentive to turn back toward Europe, or even to Russia and China, when looking to buy new equipment.
Gulf countries are re-emphasizing the need to dual-source, for fear the US could pull support for American products at a moment's notice.
It's a potential blow to US industry, at a time when budget uncertainty has sent US defense firms searching for opportunities abroad.
"There's been an element of, some of the senior officials in the region have not exactly reconsidered, but re-evaluated just how reliant they are on the US and whether or not it might be judicious to have a second option," said Doug Barrie, senior air analyst at the International Institute for Strategic Studies.
Those political concerns are driving "Gulf monarchies to deal with European, Russian and emerging OEMs instead of traditional American allies, regardless how advantageous [foreign military sales] packages and support solutions could be," said Alix Leboulanger, and analyst with Frost & Sullivan.
Adds Richard Aboulafia, an analyst with the Teal Group, the lessons learned from the last few years are driving Gulf nations to "double down on dual-sourcing, find more strategic relationships like France or Britain, and most of all, acknowledge need for self-sufficiency in terms of military operations."
And while the GCC nations are unlikely to ever move fully away from US goods, the decision to pivot toward Europe comes at a time of growing requirements for fighters, trainers and ISR assets, a potential cash flow that US firms do not want to miss out on.
In one of the last fighter jet competitions on the horizon, the United Arab Emirates is looking to buy a next-generation fighter to replace its existing fleet of Lockheed Martin F-16s and French Mirage 2000s. The UAE and many Middle Eastern countries traditionally dual-source their fleets, buying jets from Europe as well as the US But experts say the US may be losing the edge in this market, due to controversy surround the F-35.
The UAE has been widely expected to buy another batch of 30 US F-16s, said Aboulafia. But recently rumors have surfaced that the nation is looking to European fighters instead.
This may reflect the UAE's irritation with the US over the recent Iran nuclear deal, Aboulafia said. As a result of the Iran deal, Israel requested the US not sell Lockheed's newest fifth-generation fighter jet to any other nations in the region for the rest of the decade.
The UAE earlier this year restarted talks to order the Dassault Rafale to replace the Mirage 2000 fleet, Defense News reported.
"They've already got their F-16s, so they are going to balance it with a European fighter, not go all American," Byron Callan, an analyst with Capital Alpha Partners, told Defense News, adding that from the UAE's perspective: "We're not going to tie ourselves at the waist to the US or Europe."
The UAE could choose to buy Boeing's F/A-18s, which the company currently builds for the Navy, but that outcome is unlikely, Callan said.
Boeing is aggressively trying to sell its legacy F/A-18s and Air Force F-15s abroad as the US production lines of both planes draw to a close.
"They have to rely on the Middle East to keep the line alive for the next decade," Callan said.
The UAE is the primary market for fighter aircraft in the region, Aboulafia said. Qatar is buying the Rafale; meanwhile Kuwait just agreed to purchase 28 Eurofighter Typhoon combat jets. There are rumors Kuwait is looking at buying the F/A-18, but Aboulafia said that is also unlikely.
Another complication is that Germany's defense ministry has frozen deliveries of the Eurofighter aircraft since discovering a new technical problem. The Saudis could choose to buy a second tranche of Eurofighters after the pause in production, but this is unlikely, Callan said.
"The program is going to have to take a link break if the Saudis don't step in here," Callan said. "That's probably where a lot of this plays through ... It's hard to see programs take line breaks and then come back."
ISR and Missile Defense
For many of the Gulf countries, there is a growing need for intelligence, surveillance and reconnaissance (ISR) assets, particularly as lessons from the Yemen and Syria campaigns are being absorbed.
"As soon as you get into an air operation, that is when you start to find where you're short and things you need more of," said Barrie. "Light turboprop ISR style platform, medium-altitude long-endurance UAVs, maritime surveillance, the ability to see what's happening next door — all of that stuff is going to be of interest."
In theory, the US should have an advantage on unmanned system sales in the region. But trade restrictions, self-imposed by the US government, have greatly limited the ability of US industry to sell UAVs abroad.
While those restrictions have recently been relaxed, the delay opened the door globally to competing platforms from Israel, Russia and China, said Mike Blades, an analyst with Frost & Sullivan. And while he notes Israel isn't much of a threat in the Gulf market, China and Russia have made inroads.
"The bottom line is there is a lot of demand for UAVs in the Gulf region," Blades said. "If we don't sell, the Chinese gladly will."
In particular, Blades said, selling US-made armed UAVs to anyone is difficult given the domestic attitude toward the Obama administration's use of drone strikes worldwide.
Barrie agreed, noting that "the Chinese are going to basically put stuff out on the market that the US has been more reticent to do."
Competition also comes locally, as a number of countries have launched domestic UAV programs. Saudi Arabia has reportedly been working on developing an indigenous system with Denel Dynamics of South Africa, while Leboulanger predicts "a growing interest for weapon systems manufactured by regional OEMs from Turkey and the UAE, especially UAVs."
Another gap exposed by the Yemen campaign is the need for command and control aircraft and, potentially, maritime surveillance, said Aboulafia.
The need for command and control systems has been known for a while, agreed Barrie, adding that the Yemen operations may help it move towards the top of GCC nation's wish lists.
That is perhaps the bright spot for US firms in the Gulf, as American industry remains the global leader in both command and control and maritime patrol.
"If you couple it all together, there are gaps in capabilities coverage that match up with the need for self-sufficiency," he said.
"They have the need for greater indigenous capabilities, but you also have a desire to source elsewhere. And the only people who make something that's truly robust in these classes, the high-end capabilities, are in fact American companies. So you're not dual sourcing this if you want a capability that's up there."
Another area where US industry could see a boost is missile defense, said Barrie, who notes "there have been a lot of short-range missiles flying around as a result of Yemen, so that will focus people's mind on the missile defense piece."
Aleksandar Jovovic of Avascent notes that the US has put an emphasis on foreign military sales to countries involved in the Yemen and Syria conflicts, but particularly has supported "the strengthening of missile defense capabilities in response to the perceived weakening of Western pressure on Iran."
"The dramatic pictures of Iranian missiles in underground tunnels were aimed not only at the US, but also at the GCC countries," Jovovic noted.
Aaron Mehta was deputy editor and senior Pentagon correspondent for Defense News, covering policy, strategy and acquisition at the highest levels of the Defense Department and its international partners.