Saudi starts local military production strategy to save $10bn yearly

March 1, 2018 1:22 pm


The shakeup that recently took place in the Saudi military was pre-planned in Saudi Vision 2030.

The country’s sovereign wealth fund established Saudi Arabian Military Industries, or SAMI, in May 2017, a company that will manufacture equipment and provide maintenance services across units, including air and land systems, weapons and missiles, and defense electronics, mainly in joint ventures.

And one needs to move the pieces around to achieve the vision of reform that Saudi Crown Prince Mohammed bin Salman envisioned for the kingdom.

First a corruption crackdown, then military chess moves, all ahead of an important trip to both Europe and the US this month.

What’s the point of the leadership change at the top in the military?

Revealed: Military divisions where Saudi women could be recruited in

 Inefficient arsenal

In a series of royal decrees announced late Monday, Saudi King Salman discharged dozens of officials across the government, bringing in a new chief of staff for the Saudi military and new officials for security.

The New York Times (NYT) said that King Salman is shaking up the leadership of the kingdom’s military and internal security services, at a time of rapid change for the kingdom.

“Over several decades, Saudi Arabia has spent hundreds of billions of dollars assembling an impressive array of military hardware from the United States, Britain and other countries,” said NYT.

“But the heavy spending never translated into an effective fighting force that would enable the kingdom to protect itself and engage in military ventures abroad.”

It added that crown prince Mohammed has spoken publicly of his frustration over the gap between the kingdom’s military spending and its capabilities.

“The new changes seem to be part of an effort to narrow the gap,” NYT said.

Read: Is Saudi a divided nation looking for an identity amidst transformation?

Offence to Defense

Riyadh this week is hosting international defense companies to display their hardware.

At the exhibition in Riyadh, dozens of companies marketed their cyber weaponry, combat vehicles and communications systems.

According to Bloomberg, Crown Prince Mohammed Bin Salman’s as now turned his attention to the military as he extends his authority over the kingdom, and reforms the country’s finances.

“The new era for defense includes developing a domestic industry so that the world’s biggest importer of U.S. weapons can make hardware itself in conjunction with foreign manufacturers,” said Bloomberg.

“For companies specializing in military equipment, it could mean billions of dollars in contracts as the kingdom spends decades building an industry from scratch.”

The ultimate goal is to “localize” 50 percent of Saudi procurement from 2 percent now, according to SAMI’s chief executive officer, Andreas Schwer telling reporters at the event.

“That will create jobs and generate $10 billion a year in revenue for SAMI by 2030,” he said.

Raytheon Saudi Arabia is one of the U.S. defense companies working with SAMI and anticipates it will finalize details of a joint venture with SAMI over the next couple of weeks, according to Michael Pottier, vice president of business development.

“The company estimates it will generate $7 billion of revenue through the localization of defense projects in Saudi Arabia over the next five to seven years,” Pottier said.

Is Saudi sending the right signals ahead of Saudi Crown Prince’s UK US trip?

Europe US trip- all related

Saudi Crown Prince Mohammed of Saudi Arabia, will likely be leaving March 7 to London, then head to New York, Washington, San Francisco and maybe even Texas, according to Forbes.

The highlight for Trump on his last visit to the kingdom was $350 billion in deals reached between the kingdom and the U.S., including $100 billion or so in arms sales.

“But His Royal Highness is not coming with the intention of investing in America (Or Europe for that matter), rather in hopes of wooing western investors to inject capital into Saudi Arabia,” said Forbes, as a safe haven for venture capital, economically and security wise.

 

 

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Hadi Khatib
By Hadi Khatib
Hadi Khatib is a business editor with more than 15 years' experience delivering news and copy of relevance to a wide range of audiences. If newsworthy and actionable, you will find this editor interested in hearing about your sector developments and writing about it.



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