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Kuwait Defence and Security Report Q1 2009
Market |
Defence |
Report Type |
Market Research |
Country |
Kuwait |
Published |
12 February 2009 |
Number of Pages |
38 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
The three months to the end of December 2008 brought a number of issues relevant to the Kuwaiti defence industry to the fore. One is that Kuwait has a small number of indirect security threats, but benefits from the external security endowed upon it by the US. In the past, its geo-strategic location made it vulnerable to threats, illustrated by the Iraqi invasion in 1991 and the possibility of an Iraqi missile strike on Kuwait prior to the US-led coalition invasion of Iraq in 2003. Kuwait faces a limited internal threat from al-Qaeda-linked militants operating on Kuwaiti soil. As with many of the region’s ruling regimes, there is a degree of protest from within disaffected sections of the population. The emirate will remain concerned with the ongoing instabilities in post-war Iraq and the possibility of Kuwaiti jihadis returning from Iraq.
Another key theme is that US foreign military assistance will continue to dominate Kuwait’s imports trade, with the vast majority of its arms procurements being supplied by US-based companies. Kuwait lacks an established indigenous defence industry of significance, and its armed forces are almost entirely reliant upon procurements from foreign sources for equipment and training. The Kuwaiti economy is currently able to support a high level of military expenditure as high oil prices raised the oil revenue in recent years, leading to record excess budget surpluses. The upgrading of Kuwaiti military hardware and equipment is unlikely to decrease in the near future, given the ongoing US involvement in the region and the current strength of the Kuwaiti economy. On this basis, high military expenditure is therefore likely to continue into the foreseeable future. While the US is the major layer, Kuwait has increasingly begun to obtain arms from a wider source of suppliers, including European and Asian states. The emirate does not have an extensive arms export industry.
For the time being, we continue to expect that the Kuwaiti government will increase defence spending by 5% annually, in real terms, over the coming years. Absolute increases will depend in part on how the country’s economy fares in the face of the global financial crisis. Thus far, the economy has avoided recession, but our oil price forecast for 2009 at US$75.00/bbl implies a significant but not disastrous downturn for the Kuwaiti economy.
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