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 November 2010 

Lt. Gen. Lawrence P. Farrell, Jr., USAF (Ret)For U.S. Defense Industry, Many Opportunities in the Middle East 

November 2010

by Lt. Gen. Lawrence P. Farrell, Jr., USAF (Ret) 

Industry analysts for some time have forecast a growing defense market in the Middle East. Countries in the Gulf Cooperation Council, particularly, are gaining financial muscle, and they are seeking to beef up their militaries with modern technology. Their interest in modernizing their weapon systems is partly fueled by concerns about Iran’s rising clout in the region.

In early October, NDIA led a trade mission to the United Arab Emirates (UAE), a country that is expected to make significant investments in military platforms and weapons over the coming years.

NDIA partnered with the U.S.-UAE Business Council (http://www.usuaebusiness.org) led by its president, Danny E. Sebright, who is also vice president of The Cohen Group. The council is the leading advocate for building commercial relationships and expanding business opportunities between the two countries.

The mission also was supported by the UAE Embassy in Washington, D.C., led by Ambassador Yousef Al Otaiba, the Department of Commerce, the U.S. Embassy in the UAE and the U.S. Commercial Service detachment.

Significant business opportunities for U.S. defense contractors were discovered throughout the visit, even for companies who were already doing business in the UAE.

The mission kicked off with a welcome reception that was addressed by Sheikha Lubna, the UAE’s minister of foreign trade. Successive sessions throughout the week outlined the “hows” of doing business in the UAE and presentations by local companies that are seeking corporate partners.

The UAE has developed an economic plan through 2030 that forms the basis for economic development. The basic objective for the Emirates is to move the economy away from today’s reliance on oil. Currently, 60 percent of national income comes from energy exports. By 2030, the country aims to reduce that figure to 40 percent.

In subsequent years, dependence on energy exports will continue to decline as economic development spins off value-added businesses in disparate economic sectors — maintenance, repair and overhaul (MRO), technical services, information technology, security and infrastructure protection (big emphasis on ports and critical energy assets), sensors, shipbuilding, unmanned systems, firearms production, munitions production, healthcare, security services, vehicle production, shooting ranges, operational training, workshop management, supplies and supply chains, testing, systems integration, systems upgrade, manufacturing, services, and education.

The UAE recognizes that its energy resources have a limited run, even if they are expected to last for another 70 to 100 years. Leaders have embarked on a plan to diversify the economy in preparation for a post-oil future. The first target is human capital development, to educate UAE citizens in technology and the sciences so that eventually they can take over as executives and program managers. Today the country is heavily dependent on outsiders and the goal is to nurture homegrown skills. 

The second target is technology transfer, which would enable the Emirates to build indigenous industrial capability in many areas. The UAE has ample resources to invest in many areas. The choice is to focus on people and industrial development. The strategy is to invite outside firms to establish business relationships and partnerships with Emirati companies. The option is also available to establish wholly owned enterprises that operate either as suppliers to the Emirati government or as operators in duty-free zones for exports outside the Emirates.

The long-term vision is to become the go-to supplier of services and products for the entire region. A case in point is healthcare. Affluent citizens in the Middle East today who need serious medical care travel to France or the United States. The plan is for the UAE to become a center of excellence for medical care in the Middle East. A major high-tech medical facility is being developed and Emirati students are being encouraged to attend medical schools, either overseas or in the UAE.

The UAE government is welcoming partnerships with U.S. companies, particularly in aerospace, defense and homeland security. 

One example is ongoing activities in aircraft MRO for airlines operating in the Middle East. There is also significant work under way in composite manufacturing in support of new aircraft development in Europe and the United States.

A week of detailed briefings and discussions made it clear that there are major opportunities for U.S. companies to do business with and in the UAE. Local corporations, remarkably, profess similar values as U.S. industry. They all emphasize integrity, service, commitment and excellence.

Companies who made presentations and sponsored our visit include Emirates Advanced Investments, The International Golden Group, Offsets Bureau/Tawazan and Mubadala.

There is impressive and rapid development ongoing in the UAE. There is also a welcoming attitude, and it is worth a look. There are opportunities for U.S. industry beyond the domestic market.

Please e-mail your comments to lfarrell@ndia.org.

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