Saudi Arabia is reportedly continuing to import weapons from Western countries, especially the US, despite austerity measures taken recently to handle the kingdom’s worst financial crisis in decades.
Saudi Arabia posted a $9 billion budget deficit in the first quarter of 2020 due to plummeting oil prices and the novel coronavirus (COVID-19) pandemic.
Riyadh announced last month that it will suspend the cost of living allowance and raise the value added tax threefold in a bid to boost state finances.
However, the Financial Times reported on Sunday that the kingdom’s military expenditure emerged unscathed from the tough austerity measures, citing military contracts signed with American arms giants.
A Western arms industry executive based in the Persian Gulf quoted top Saudi officials as saying that there would be no military cuts.
“I was fully expecting there to be a cut, but the information from very senior levels and princes is ‘no, we’re not going to do it. In fact, don’t come and ask me if your program is going to slip, keep working hard at it, because we are just carrying ahead,’” the executive said.
“We’ve got a large number of requirements popping in through the door.”
The report cited the Pentagon’s contracts worth more than $2.6 billion for the delivery of more than 1,000 air-to-surface and anti-ship missiles to Saudi Arabia.
The US arms manufacturer Lockheed Martin, which supplies THAAD missiles to Riyadh, also told the Financial Times that it had “not seen a backing off of expenditures on defense” by any of its main Middle Eastern customers.
Robert Harward, chief executive of Lockheed’s Middle East unit, said although it was too early to judge, he expected that customers, including Saudi Arabia, “will continue with their procurement”.
“Regional threats are not receding and are more unpredictable than ever,” he said. “Countries will have to make choices on budgets, as countries always have to do.”
Another Persian Gulf-based military executive confirmed that his company had not witnessed “any shift in attitudes from the customers,” but suggested that it could still change, the FT added.