The United Arab Emirates, a unique
oasis of financial optimism among Persian Gulf states, is a
particularly attractive market for arms suppliers. Its government
is considering arms deals for fighter aircraft and frigates that
are likely to be the last of their size this century. The
competition for these contracts, especially against the
background of dwindling domestic demand for advanced weaponry
following the end of the cold war, has been extremely keen. The
competitors primarily the US, UK, France and Russia must
meet several criteria. These include providing state-of-the-art
hardware; competitive pricing; incorporating acceptable offset
programme terms; and, though not specifically a requirement, be
prepared to conclude a defence co-operation agreement with the
UAE government.
Despite weak oil prices, the UAE remains the most dynamic economy in the Persian Gulf. Though the UAE has maintained an ambitious military procurement schedule, it has neither delayed payments on purchases nor secured borrowing from foreign commercial banks as other Gulf states have in order to pay debts associated with arms purchases. However, after packages for fighter aircraft and frigates are agreed, it is unlikely that packages of a similar calibre will be announced for some time.
The UAE announced a dramatic increase in defence expenditure at the beginning of October 1996 as it pressed ahead with plans to bolster its military capability. Deliveries of British Hawk advanced jet-trainer aircraft and French Leclerc tanks (part of $4 billion package signed in 1993) have continued. Federal spending by the Ministry of Defence and the Ministry of the Interior for the first half of 1996 was $1.92 billion, approximately the equivalent to the total for the whole of 1995. Defence accounted for almost one-third of overall spending in 1995 and appears destined to account for at least that much in 1996.
The UAE is expected to place about $8 billion in arms orders during1996, the order for securing the fighter aircraft contract for up to 80 planes is worth $6 billion alone. At the final stages of this competition the choice had narrowed down to either the American F-16 or the French Rafale. The UAE announced during August 1996 that the field of British, French, Russian and American proposals had been narrowed to these two contenders to meet the requirement for a multi-role, long-range aircraft with superior air-to-air combat capability. The requirement also included interdiction precision strike weapons and advanced electronic warfare capability. Obstacles that may have short-circuited the US bid have been surmounted by American agreement to provide export licences for high-speed anti-radar missiles (HARM) and stand-off land-attack missiles (SLAM) as specifically requested by UAE. These would be the first such missiles sold by the US in the Middle East.
Plans to enhance the UAE's naval capability is a direct consequence of the acquisition of Kilo-class submarines by Iran. Concern about Iranian threats to the free flow of oil in the Persian Gulf and particularly the Strait of Hormuz, has lead the UAE to initiate these expansion plans. In April 1996 a $360-million contract was let for two in-service, multi-purpose frigates equipped with Seasparrow and Harpoon missile systems, a helicopter, and an anti-submarine warfare capability, with the Dutch Marine Consortium. The UAE also has invited proposals for an unspecified number of frigates and six missile-attack boats worth several billion dollars, and up to six mine-sweepers and 100 fast patrol boats worth approximately $65 million.
