The Defence Industrial Base
The global defence industry generates $2.2 trillion in annual spending, with the Gulf states collectively accounting for over $100 billion — approximately 5% of global defence expenditure concentrated in a region of 60 million people. Saudi Arabia is the world’s largest arms importer. The UAE has become one of the top five importers and is simultaneously building a domestic defence industrial base. Qatar’s defence budget has grown 300%+ over the past decade.
The shift from pure importation to domestic defence production is a strategic priority across the Gulf. Saudi Arabia’s GAMI (General Authority for Military Industries) targets 50% defence spending localisation by 2030. The UAE’s EDGE Group — formed from the consolidation of 25 defence entities — has become a top-25 global defence company. These programmes create advisory mandates across joint venture structuring, technology transfer, offset programme compliance, and the institutional frameworks that defence industrialisation requires.
Key Systems & Capabilities
Gulf defence procurement spans every major system category: air defence (Patriot, THAAD, NASAMS missile systems), combat aircraft (F-15SA, Eurofighter Typhoon, Rafale, F-35 aspirations), naval platforms (corvettes, frigates, offshore patrol vessels, submarines under consideration), armoured vehicles (LAV, Leclerc, Namer), and the C4ISR (Command, Control, Communications, Computers, Intelligence, Surveillance, Reconnaissance) systems that integrate these platforms into operational networks.
Unmanned systems — drones for surveillance, strike, and logistics — are an area of Gulf leadership. The UAE’s EDGE Group produces the Reach-S reconnaissance UAV and is developing autonomous naval vessels. Saudi Arabia’s SAMI (Saudi Arabian Military Industries) is developing armed drone platforms. The technology transfer and co-production agreements that accompany drone programmes create particularly rich advisory mandates.
Offset Programmes
Offset programmes — requiring international defence contractors to invest in the purchasing country’s economy as a condition of the contract — are a fundamental feature of Gulf defence procurement. Saudi Arabia’s offset programme requires 35% of contract value to be invested in the local economy. The UAE’s Tawazun Economic Programme mandates 60% offset for qualifying contracts. These programmes create substantial advisory mandates in investment identification, compliance verification, and the JV structures through which offsets are typically fulfilled.
Cyber Defence & Electronic Warfare
Cyber operations and electronic warfare have become the fastest-growing segments of defence budgets globally. Gulf states face significant cyber threats from state and non-state actors, driving investment in national cybersecurity infrastructure, offensive and defensive cyber capabilities, and the training programmes that build indigenous cyber warfare expertise. The digital technology dimension of defence is becoming as consequential as the physical dimension.
AUKUS & Alliance Implications
The AUKUS submarine programme, the Quad (US-Japan-India-Australia), and NATO expansion are reshaping the global defence industrial base in ways that affect Gulf procurement. Competition for US defence industrial capacity (shipyards, missile production lines, aircraft assembly) means Gulf buyers face longer delivery timelines. Simultaneously, European defence industrial expansion (driven by the Ukraine conflict) creates alternative sourcing opportunities for Gulf buyers. Our aerospace and defence practice navigates these geopolitical and commercial dynamics.
Investment Thesis
Gulf defence spending is structural and growing — driven by regional security dynamics, modernisation requirements, and the industrialisation objectives embedded in national transformation programmes. The advisory economics span procurement strategy, offset compliance, JV structuring, and the cross-border dimensions of defence trade that require specialised counsel.
Defence in the Gulf is transitioning from procurement to production — and the advisory mandate is transitioning from transaction support to industrial strategy.