When Saudi reveals its annual budget statements every year, its defence budget always stands out.
In 2018, the defence sector allocation represented 21.5% ($56 billion) of the annual budget, a significant percentage eclipsing other sectors such as education.
Yet, Saudi’s spending on military has been to fulfill a certain 2030 goal, amongst other requirements.
Defence spending is a major part of Saudi’s budget
In recent years, Saudi Arabia has ramped up its arms sales, bolstered by a growing annual budget. In fact, Saudi was the world’s largest importer of arms between 2014-2018, according to the Stockholm International Peace Research Institute (SIPRI), with an increase of 192% compared with 2009–13. SIPRI measures the volume of deliveries of arms, not the dollar value of deals.
2019, like 2018, saw a change in direction for the Gulf Kingdom, however. As in 2018, Saudi’s military budget for 2019 shrinked, this time by 12%, to $51 billion. With an annual budget projected at $295 billion, this puts the Kingdom’s spending on military at a whopping 17.3% of its total annual budget, on par with the country’s education budget.
Saudi is in the midst of several armed conflicts, and has no weapons industry of its own to speak of, so it has had to import what military equipment it needs.
Defence plays a part in Vision 2030
Crown Prince Mohammad bin Salman’s Vision 2030 foresees a diversified Saudi economy, one that is not as reliant on oil for its income.
As such, the defence industry will play a role in upcoming years.
“The benefits of localizing our own defense industries are not limited to solely reducing military spending,” the official Vision 2030 site reads. “Although the Kingdom is the world’s third biggest military spender, only 2% of this spending is within our Kingdom. The national defense industrial sector is limited to only seven companies and two research centers.”
“Our aim is to localize over 50% of military equipment spending by 2030,” the statement continues. “Localization will be achieved through direct investments and strategic partnerships with leading companies in this sector.”
Order backlogs in the billions of dollars
Not a lot of information is made public regarding arms deals and such, a CNN report from November last year explains.
This is where SIPRI comes in, attempting to track deals involving major weapons.
According to SIPRI data cited by CNN, Saudi imports from the last decade show the United States as the biggest supplier, followed by the United Kingdom, France, and Spain.
Among the countless deals it has signed, Saudi inked a $110 billion weapons deal in 2017 with the US, of which it has only paid $14.5 billion as of October last year, according to CNN citing a Pentagon official. The rest of the payment is expected to unfold over the 10 years following the date of signing.
Besides this agreement, Saudi has plenty of other ongoing transactions with the United States. A new $15 billion missiles and weapons deal was signed in November of last year between the two countries.
Besides the US, Canada remains a veritable arms supplier to the Kingdom, despite tensions between the two countries. A recent armored-vehicle contract by Canadian firm General Dynamics was contested by the federal government, however, due to mounting tensions. This has led to the company protesting to the Canadian government the hold-up of their $13 billion deal.
Elsewhere, other European countries continue to provide Saudi with weapons. Russia and China are among the suppliers as well, and in constant competition for Saudi contracts.