Sunday February 22, 11:45 AM
Gulf defence spending seen strong despite low oil
By Stanley Carvalho
ABU DHABI, Feb 22 (Reuters) - Regional tensions are fuelling continued military spending by Gulf Arab states despite the global downturn and low oil prices, major arms suppliers said on Sunday.
'The Middle East market, including the Gulf, remains very viable and credible. There is confidence in their ability to drive on their acquisition schemes,' said P.T. Mikolash, Raytheon Co (NYSE: RTN - news) .'s Middle East and North Africa chief.
'There are no delays in our projects so far,' he said on the sidelines of the International Defence Exhibition (IDEX) in Abu Dhabi, the Middle East's largest military show.
Raytheon announced on Sunday it had won a contract of 'sizeable' value to provide the United Arab Emirates 224 advanced version AIM-120C-7 missiles.
Earlier this month Raytheon announced a $246 million contract for the UAE to provide spare parts for the new Patriot systems that Raytheon is building. Raytheon is also developing a laser-guided rocket programme for the UAE.
The energy-rich Gulf region has been affected by the collapse of world oil prices from nearly $150 a barrel last July to below $40 a barrel. The global financial crisis has also hit real estate and financial markets in the Gulf.
But concerns among Gulf countries, especially Saudi Arabia, over non-Arab power Iran's rising influence is fuelling an arms race. Gulf Arabs fear Iran's nuclear energy programme will allow it to develop nuclear weapons. Tehran denies any such interest.
'Security needs are still important to them as much as the global downturn,' said John Ward, a vice-president at Lockheed Martin (NYSE: LMT - news) , the world's biggest defence contractor.
'We have not seen any slowdown in any of the projects in this region that we are working on,' he said, adding the Gulf region remains interested in air missile defence systems.
In December last year the UAE became Lockheed's first Middle Eastern customer and the fourth international customer for the PAC-3 Missile after a deal was finalised.
Lockheed expects in excess of $1.8 billion in PAC-3 Missile-related business over the life of the initial UAE programme, Ward said. He said Lockheed is in talks with Saudi Arabia and Kuwait to upgrade programmes.
'We have not seen a great slowdown. Our projects our long-term and there is still interest in the Gulf countries that still have budgets for defence,' said Louise Robson, spokeswoman for BAE Systems (LSE: BA.L - news) .
Boeing (NYSE: BA - news) was also upbeat. 'IDEX will continue to be a big draw for defence companies because security is of paramount importance in the region where conflicts happen all the time,' a senior Boeing defence business official said.
(Editing by Andrew Hammond and Jon Loades-Carter) Keywords: GULF DEFENCE/SPENDING
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