UK deal targets bigger share of $130bn Saudi defence spend

Saudi Press Agency

• Saudi imported $130bn of defence equipment and services in decade
• UK exports to the kingdom almost $13bn, up 18.4%
• Middle East accounts for $60bn of UK sales since 2012

The UK has signed a new agreement with Saudi Arabia to enhance bilateral defence and security cooperation as it looks to rebound from falling export sales in 2021.

Ben Wallace, secretary of state for defence met Prince Khalid Bin Salman, the minister for defence of Saudi Arabia, in London on Tuesday and welcomed the signing of the Plan for Defence Cooperation agreement.

It aims to address shared security challenges, including through regular dialogue and consultation, education and training, and capability-building.

It reaffirms the UK’s long-term commitment to working with the kingdom on promoting regional security and stability.

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The agreement comes as Saudi Arabia has been the world’s largest importer of defence equipment and services over the past decade, worth about $130 billion.

According to new figures released by the UK’s Department of Trade, the Middle East remains the dominant UK defence export destination, with nearly $60 billion of sales since 2012, reflecting the importance of the market.

Globally, Qatar ($60 billion), the UAE ($40 billion), Egypt ($30 billion) and Kuwait ($20 billion) have also been significant markets for defence exports in the past decade. 

During that time, the UK has secured significant deals including selling Typhoon aircraft to Kuwait, Qatar, Oman and Saudi Arabia.

The new Saudi agreement comes as the UK share of the global defence export market fell to an estimated 6 percent last year.

In 2020, there were 89 permanent standard individual export licences issued for export of military goods from the UK to Saudi Arabia with a total value of $1.82 billion. 

From June 2019 to July 2020, the UK government temporarily paused granting new licences to Saudi Arabia that could be used during conflict in Yemen.

The UK and France have historically vied with Russia for second or third place behind the US but in 2021 the US achieved market share of 33 percent, with France (28 percent), Russia (12 percent) and Germany (7 percent) all ahead of the UK.

France won export orders of $35.7 billion in 2021, compared to $5.6 billion in 2020, predominantly due to sales of Rafale aircraft to the UAE, Egypt and Greece.

In 2021, the value of UK security export sales was $10.2 billion, with the value of  defence orders worth $6.8 billion secured, compared to $9.3 billion in 2020. The UK’s highest annual export value was in 2018 when it achieved $17.3 billion.

Total UK defence exports to the Middle East were up from 14 percent in 2020 to 34 percent in 2021, making it the joint largest market by value, alongside North America.

Commenting on the new Saudi deal, Wallace said: “It is a pleasure to sign this Plan for Defence Cooperation, bringing us even closer to one of our most important partners.

“It is a key milestone between our two nations, as we look to enhance our defence partnership further in support of mutual and regional security.”

During his official visit to the UK, Prince Khalid toured the headquarters of BAE Systems in Cumbria to discuss ways to strengthen the company’s partnership with the Saudi Armed Forces, which extends for more than 50 years.

BAE Systems employs 5,800 employees in the kingdom with 68 percent of them being Saudi nationals, making the company one of the leading private sector employers of Saudis.

Since 1966, BAE Systems, previously known as British Aerospace, has established comprehensive systems intended to support the transfer of knowledge and technology to Saudi Arabia.

Total UK exports to Saudi Arabia amounted to nearly $13 billion, up by 18.4 percent, while total UK imports from Saudi Arabia amounted to over $4 billion, an increase of 57.1 percent. 

This means the UK reported a total trade surplus of $8.8 billion with Saudi Arabia, compared to $8.3 billion in the previous 12-month period.

Saudi Arabia was the UK’s 25th largest trading partner for the same period.

The top five goods exported from the UK to Saudi Arabia were mechanical power generators, pharmaceutical products, cleansing preparation products, jewellery and cars. UK imports from Saudi Arabia were dominated by refined oil, which made up 60 percent of the total.