BAE Jockeys With Lockheed for Gulf Sales Amid Iran Arms Threats Share Business Exchange
By Henry Meyer and Sabine Pirone
Nov. 12 (Bloomberg) -- Most of the world looks at Iran and perceives a growing nuclear threat. Its Persian Gulf neighbors are also focusing on what they call a dangerous conventional weapons buildup.
Saudi Arabia and the United Arab Emirates are leading a drive to upgrade their missile-defense, naval and air forces. The spending offers U.S. and European defense companies such as BAE Systems Plc and Lockheed Martin Corp. as much as $40 billion in sales, mostly in the next two to five years, analysts estimate. Some of these deals may be discussed at the Dubai Air Show starting Nov. 15.
The buildup is a sign that Iran, suspected by the U.S. and its allies of developing atomic weapons, poses a growing conventional military threat too. It is testing new missiles with a longer-range strike capability and building naval forces capable of hitting neighboring oil facilities, said Sami al- Faraj, director of the Kuwait Center for Strategic Studies, which advises the Kuwaiti government.
“We are concerned not just as a government but as a people because geographically Iran is next door to us,” Prince Turki al-Faisal, Saudi intelligence chief from 1977 to 2001 and the brother of the Saudi foreign minister, said in an Oct. 10 interview in Riyadh.
Saudi Arabia, the world’s largest oil exporter, may acquire more jets made by Eurofighter Jagdflugzeug GmbH, a venture owned by London-based BAE, Rome-based Finmeccanica SpA and Paris- and Munich-based European Aeronautic, Defence & Space Co., a person familiar with the matter said last week. The country is already buying 72 Eurofighter Typhoon warplanes under a 4.4 billion- pound ($7.25 billion) 2007 contract.
Frigate Purchase
The Saudi navy is considering buying up to six multipurpose frigates at a cost of 1.5 billion euros ($2.2 billion) from Italian shipbuilder Fincantieri, Trieste-based Fincantieri said in an e-mailed briefing document on Nov. 2. DCNS, a Paris-based state-controlled warship maker, is making a separate proposal, a person familiar with the matter said.
The U.A.E., the second-biggest Arab economy, is in talks to buy 60 Rafale jet fighters made by French planemaker Dassault Aviation SA, based near Paris, Dassault spokesman Matthieu Durand said in a phone interview.
French President Nicolas Sarkozy will visit Saudi Arabia this month, presidential aides say. Sarkozy told reporters in Abu Dhabi in May that he had discussed the Rafale sale during a visit to open a military base in the U.A.E. The order may be worth as much as 8 billion euros, Le Parisien newspaper reported on May 23, citing an informed person.
Missile Defense
The U.A.E. is also discussing the purchase of a missile- defense system that is valued at $7 billion in a Pentagon estimate sent to Congress, Bethesda, Maryland-based Lockheed Martin said in a Nov. 11 e-mailed statement. It is made by Lockheed Martin and Waltham, Massachusetts-based Raytheon Co.
Chicago-based Boeing Co., the world’s second-largest planemaker, may sell four C-17 military transport planes to the U.A.E, as well as rotorcraft and fixed wing aircraft in the region, a person close to the matter said.
“BAE, Boeing and Lockheed Martin are the main beneficiaries of this trend,” said Nick Cunningham, an analyst at Evolution Securities in London. He has had a “buy” rating on BAE since October 2007.
The six U.S.-allied monarchies in the Gulf Cooperation Council hold 40 percent of global oil reserves.
Electricity Generation
Iranian Supreme Leader Ayatollah Ali Khamenei denied on Oct. 6 that his country represented a danger to Gulf Arab neighbors, and criticized their arms buildup. Iran says its nuclear program is aimed solely at civilian electricity generation.
The country demonstrated its potential on Sept. 28 when it test-fired its Shahab-3 missile. The military says it has a range of 2,000 kilometers (1,240 miles), within reach of Israel and the Persian Gulf.
Iran is building “an asymmetrical defense capability” that can attack oil production facilities and naval assets in the Gulf with missiles, diesel submarines and mines, said Theodore Karasik, director of research at the Dubai-based Institute for Near East and Gulf Military Analysis.
Mohammad Ali Jafari, the head of Iran’s Revolutionary Guard, threatened in July to retaliate against any strike on Iranian nuclear facilities by closing the Strait of Hormuz, through which one-fifth of the world’s crude oil is transported. He said the country would use “blitzkrieg tactics” in the Persian Gulf if it came under attack.
Patriot Missiles
The U.A.E., the world’s third-largest arms customer from 2004 to 2008 after China and India, according to the Stockholm International Peace Research Institute, is already spending $3.3 billion on a U.S. Patriot air and missile defense system made by Raytheon.
The Eurofighter will be on display at the air show, said spokesman Marco Valerio Bonelli. “Qatar, the United Emirates and Oman have shown interest for the warplane,” he said. “We will be at the Dubai Air Show also to demonstrate to the Minister of Defense of the United Arab Emirates that the Eurofighter is the best warplane for the local air force.”
Saudi Arabia is also seeking anti-missile defense systems as well as building a stronger navy to defend its 3,000- kilometer-long coast, said Mustafa Alani, a regional security expert at Dubai-based Gulf Research Center.
Russia is discussing weapons sales to Saudi Arabia, Russian Foreign Ministry spokesman Alexander Nesterenko said in early September. The Saudis may spend $2 billion on the S-400 missile defense system as well as tanks and helicopters, the Russian state news service RIA-Novosti said Sept. 3.
The U.S., which has military bases in several countries in the region, including the headquarters of the Fifth Fleet in Bahrain, is encouraging its allies to boost their defenses.
Defense Secretary Robert Gates said in an interview with Al-Jazeera television in early September that a stronger Gulf military capability was essential to counter Iran.
“For us, the Iranians are not stopping, they are using every possibility to upgrade their military potential,” said Alani. “For a credible deterrence, we need a credible defense capability.”
http://www.bloomberg.com/apps/news?pid=20601102&sid=aM7I1rifgb.Y
By Henry Meyer and Sabine Pirone
Nov. 12 (Bloomberg) -- Most of the world looks at Iran and perceives a growing nuclear threat. Its Persian Gulf neighbors are also focusing on what they call a dangerous conventional weapons buildup.
Saudi Arabia and the United Arab Emirates are leading a drive to upgrade their missile-defense, naval and air forces. The spending offers U.S. and European defense companies such as BAE Systems Plc and Lockheed Martin Corp. as much as $40 billion in sales, mostly in the next two to five years, analysts estimate. Some of these deals may be discussed at the Dubai Air Show starting Nov. 15.
The buildup is a sign that Iran, suspected by the U.S. and its allies of developing atomic weapons, poses a growing conventional military threat too. It is testing new missiles with a longer-range strike capability and building naval forces capable of hitting neighboring oil facilities, said Sami al- Faraj, director of the Kuwait Center for Strategic Studies, which advises the Kuwaiti government.
“We are concerned not just as a government but as a people because geographically Iran is next door to us,” Prince Turki al-Faisal, Saudi intelligence chief from 1977 to 2001 and the brother of the Saudi foreign minister, said in an Oct. 10 interview in Riyadh.
Saudi Arabia, the world’s largest oil exporter, may acquire more jets made by Eurofighter Jagdflugzeug GmbH, a venture owned by London-based BAE, Rome-based Finmeccanica SpA and Paris- and Munich-based European Aeronautic, Defence & Space Co., a person familiar with the matter said last week. The country is already buying 72 Eurofighter Typhoon warplanes under a 4.4 billion- pound ($7.25 billion) 2007 contract.
Frigate Purchase
The Saudi navy is considering buying up to six multipurpose frigates at a cost of 1.5 billion euros ($2.2 billion) from Italian shipbuilder Fincantieri, Trieste-based Fincantieri said in an e-mailed briefing document on Nov. 2. DCNS, a Paris-based state-controlled warship maker, is making a separate proposal, a person familiar with the matter said.
The U.A.E., the second-biggest Arab economy, is in talks to buy 60 Rafale jet fighters made by French planemaker Dassault Aviation SA, based near Paris, Dassault spokesman Matthieu Durand said in a phone interview.
French President Nicolas Sarkozy will visit Saudi Arabia this month, presidential aides say. Sarkozy told reporters in Abu Dhabi in May that he had discussed the Rafale sale during a visit to open a military base in the U.A.E. The order may be worth as much as 8 billion euros, Le Parisien newspaper reported on May 23, citing an informed person.
Missile Defense
The U.A.E. is also discussing the purchase of a missile- defense system that is valued at $7 billion in a Pentagon estimate sent to Congress, Bethesda, Maryland-based Lockheed Martin said in a Nov. 11 e-mailed statement. It is made by Lockheed Martin and Waltham, Massachusetts-based Raytheon Co.
Chicago-based Boeing Co., the world’s second-largest planemaker, may sell four C-17 military transport planes to the U.A.E, as well as rotorcraft and fixed wing aircraft in the region, a person close to the matter said.
“BAE, Boeing and Lockheed Martin are the main beneficiaries of this trend,” said Nick Cunningham, an analyst at Evolution Securities in London. He has had a “buy” rating on BAE since October 2007.
The six U.S.-allied monarchies in the Gulf Cooperation Council hold 40 percent of global oil reserves.
Electricity Generation
Iranian Supreme Leader Ayatollah Ali Khamenei denied on Oct. 6 that his country represented a danger to Gulf Arab neighbors, and criticized their arms buildup. Iran says its nuclear program is aimed solely at civilian electricity generation.
The country demonstrated its potential on Sept. 28 when it test-fired its Shahab-3 missile. The military says it has a range of 2,000 kilometers (1,240 miles), within reach of Israel and the Persian Gulf.
Iran is building “an asymmetrical defense capability” that can attack oil production facilities and naval assets in the Gulf with missiles, diesel submarines and mines, said Theodore Karasik, director of research at the Dubai-based Institute for Near East and Gulf Military Analysis.
Mohammad Ali Jafari, the head of Iran’s Revolutionary Guard, threatened in July to retaliate against any strike on Iranian nuclear facilities by closing the Strait of Hormuz, through which one-fifth of the world’s crude oil is transported. He said the country would use “blitzkrieg tactics” in the Persian Gulf if it came under attack.
Patriot Missiles
The U.A.E., the world’s third-largest arms customer from 2004 to 2008 after China and India, according to the Stockholm International Peace Research Institute, is already spending $3.3 billion on a U.S. Patriot air and missile defense system made by Raytheon.
The Eurofighter will be on display at the air show, said spokesman Marco Valerio Bonelli. “Qatar, the United Emirates and Oman have shown interest for the warplane,” he said. “We will be at the Dubai Air Show also to demonstrate to the Minister of Defense of the United Arab Emirates that the Eurofighter is the best warplane for the local air force.”
Saudi Arabia is also seeking anti-missile defense systems as well as building a stronger navy to defend its 3,000- kilometer-long coast, said Mustafa Alani, a regional security expert at Dubai-based Gulf Research Center.
Russia is discussing weapons sales to Saudi Arabia, Russian Foreign Ministry spokesman Alexander Nesterenko said in early September. The Saudis may spend $2 billion on the S-400 missile defense system as well as tanks and helicopters, the Russian state news service RIA-Novosti said Sept. 3.
The U.S., which has military bases in several countries in the region, including the headquarters of the Fifth Fleet in Bahrain, is encouraging its allies to boost their defenses.
Defense Secretary Robert Gates said in an interview with Al-Jazeera television in early September that a stronger Gulf military capability was essential to counter Iran.
“For us, the Iranians are not stopping, they are using every possibility to upgrade their military potential,” said Alani. “For a credible deterrence, we need a credible defense capability.”
http://www.bloomberg.com/apps/news?pid=20601102&sid=aM7I1rifgb.Y