UK resists international restrictions on arms sales to Saudi Arabia for now, says GlobalData

The UK’s Foreign Minister declining to restrict export licenses of arms to Saudi Arabia last week follows growing pressure as other Western states act in line with rising condemnation of Saudi Arabia and its conduct in the civil war in Yemen. Both Italy and the US have paused the export of arms, particularly missiles and ordnance. This resistance highlights the importance of the arms relationship with Saudi Arabia for the UK. However, the relationship is lopsided. The imposition of restrictions on sales to Saudi Arabia would have a greater effect on UK firms that it would on Saudi customers, for whom the loss of US partnerships represents a much greater blow, says GlobalData, a leading data and analytics company.

According to the company report, Saudi Arabian Defense Market – Attractiveness, Competitive Landscape and Forecasts to 2025, US primes were most successful in Saudi Arabia between 2015 and 2019. In this period, defense imports from the US accounted for 73.5% of Saudi Arabia’s total defense imports, while the UK only accounted for 12.65%. However, during this same period, Saudi Arabia accounted for 46% of UK defense exports. This was followed by Oman at 16%, meaning that Middle Eastern states hold over half of the market share.

Harry Boneham, Associate Analyst at GlobalData, commented: “Given the importance of the Saudi Arabian defense market to the UK defence industry, resistance to the imposition of restrictions does not come as great surprise.

“However, going forward, it is unlikely that international and domestic political pressure will relent, and some form of restriction may be inevitable. It is most likely that if restrictions are put in place on UK primes, they will focus on the sale of missiles and ordnance to Saudi Arabia, following the precedent set by the US and Italy. This may leave the opportunity for continued business in other sub-segments.

“Ultimately, as limits are placed on exports by Western suppliers, this could create space for previously untapped suppliers, such as China. Whilst Chinese platforms are considered less capable than Western competitors, the offer of reduced controls on Chinese platforms could be a motivating factor in future Saudi procurement decisions.”

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