Despite the heavy influence oil revenue plays for some Middle East countries, spending on defense remains positive, a review from IHS Inc. finds.
IHS in its review of defense spending by Saudi Arabia, Qatar and United Arab Emirates finds upward momentum despite a weakened crude oil market.
"Despite Saudi Arabia's heavy exposure to oil price fluctuations, there have been very few signs of any severe reactionary adjustments to government spending trends," Craig Caffrey, principal defense budget analyst at IHS Jane's Aerospace, Defense and Security, said in a Tuesday statement. "The Kingdom has only cut defense and security expenditure once over the last 15 years."
IHS finds Saudi Arabia's defense budget has accelerated to a rate of 19 percent a year since 2011. Brent crude oil prices reached as high as $123 per barrel in 2011, more than twice the current selling price. While the analysis finds short-term spending on defense could slow down, the long-term prospects "remain strong."
By 2020, Saudi Arabia will be the fifth-largest spender on defense, tapping around $60 billion a year, up from the current $49 billion.
Saudi Arabia this year steered a pan-Arab military offensive in Yemen dubbed Decisive Storm. The offensive was meant to ensure political stability in a Yemen under threat from the Houthi rebel group, which has backing from the Shiite government in Iran.
Yemeni President Abdu Rabbu Mansour Hadi fled the country to Saudi Arabia early this year.
IHS finds the Emirati and Qatari defense budgets mirroring those of Saudi Arabia's. For the United Arab Emirates, its defense spending is expected to grow starting in 2017.
"Traditionally the military has not been seen as a priority by Qatar's government," Caffrey said. "However, the announcement of $23 billion worth of potential defense procurement projects in 2014 marked an unprecedented increase in investment in the military."
