Key Takeaways
· Turkey has significantly expanded its domestic arms production and exports, becoming a key supplier to Gulf Cooperation States (GCC) states. Turkish arms exports increased by 106% between 2019-2023 compared to 2014-2018.
· GCC countries, particularly Saudi Arabia, are interested in Turkey's experience in developing their own domestic arms industries as they seek to develop their own domestic arms industries.
· Turkish arms manufacturers are well-positioned in GCC states due to their cost-effectiveness, willingness to transfer technology, and lack of political restrictions compared to Western suppliers.
· Western arms manufacturers are losing ground in the Middle East due to political considerations and human rights concerns, though there are signs this stance may be softening in response to growing Russian and Chinese influence in the region.
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Turkish Firms Expanding into GCC States
In recent years, Ankara has significantly reduced its reliance on foreign arms imports by expanding domestic production of armed drones, missile systems, armoured vehicles, and air defence systems. This strategy has not only bolstered Turkey's economy but also enhanced its national security, establishing Ankara as a key regional military hub. Turkey's achievements in this area have drawn interest from several Arab nations, in particular Saudi Arabia, which has shown a strong interest in learning from Turkey’s experience to develop their own domestic arms industries.
Since Erdogan’s Justice and Development Party (AKP) came to power in Turkey in 2002, the country has gone from being the third-largest recipient of arms to the eleventh-largest arms exporter. Between 2019-2023, Turkey’s arms exports increased by 106% compared to 2014-2018. In particular, it has significantly reduced its dependence upon American imports, dropping by 81% between 2016 and 2020. A contributing factor was Ankara’s removal from America’s F-35 fighter jet program due to its purchase of Russia’s S-400 air defence system in 2019.
The GCC states (which constitutes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE) have shown significant demand for Turkish weaponry. This has also been facilitated by the signing of the 2021 al-Ula agreement, which ended the 2017-2021 blockade against Qatar and improved relations between Saudi Arabia, Turkey, and the UAE. Beyond the immediate advantages of cost and quality, these states likely find Turkey’s experience in developing its military-industrial base appealing. The country is making significant progress towards self-sufficiency. Turkish manufactured components accounted for 80% of the country’s defence production in 2023, up from 73% in 2022. Additional benefits for GCC states include technology transfer from Turkish manufacturers. These improve a recipient state's defensive capabilities and help foster domestic production capabilities. Whilst they also increase Turkey’s revenue streams, the sale of weapons also allows it to project power. Ankara has increasingly developed an independent foreign policy under the rule of President Erdogan, taking sides in many regional proxy conflicts such as Libya, Syria, and Somalia.
Three GCC states, Oman, Qatar, and the UAE were Turkey’s top three clients of military equipment between 2018-2022. Combined they accounted for 50% of Turkish arms exports. Alongside its highly popular Bayraktar TB2 UAV – of which it has contracts worth $2 billion with the UAE and $370 million with Kuwait – Turkey has sold 172 armoured vehicles to Oman. Furthermore, Turkey collaborates with Qatar on the production of the Altay, its new-generation main battle tank. As Turkey’s closest regional ally, Qatar maintains very close connections directly through to the production level, with one of Turkey’s major vehicle manufacturers (BMC) being 49% owned by the Qatar Armed Forces Industry Committee.
Saudi Arabia has also elevated defence cooperation with Turkey further. It seeks to boost domestic manufacturing and develop its own military-industrial complex through Turkish technology transfers and co-producing arms on Saudi soil. Thereby reducing its reliance on arms purchased from predominantly Western countries who often link sales to political issues such as human rights.
Beyond Exports: Establishing Local Production Capabilities in GCC States
Saudi Arabia's ambitions to develop a domestic arms industry is a part of its Vision 2030, in which the kingdom aims to diversify its economy beyond fossil fuels. As part of this plan, Riyadh is aiming to source 50% of its military procurement from domestic suppliers by 2030. Riyadh has been inspired by the success of the UAE in establishing a local defence corporation, EDGE. In order to realise its domestication efforts, Riyadh has been encouraging foreign investors to form local LLCs, where partnering with local entities often constitutes a condition for winning government tenders. Overseeing its own indigenisation programme are two military-industrial bodies, the General Authority for Military Industries (GAMI) and Saudi Arabian Military Industries (SAMI), which engages with foreign defence contractors to localise production of foreign weapons platforms.
In July 2024, SAMI and three Turkish defence companies specialising in aerospace and technology signed three memoranda of understanding (MOUs). The agreement would see the construction of production facilities for Baykar’s UAVs within Saudi Arabia, the establishment of a Center of Excellence with Fergani Uzay for the development of emerging technologies to serve the global space sector, whilst the MOU with ASELSAN covered the exploration of opportunities for transferring, localising, and developing advanced defence electronics technologies. This follows SAMI’s 2023 agreement to participate in the production of Baykar’s Akinci MALE UAV, following the normalisation of relations between Saudi Arabia and Turkey. The project aims for units to be 70% produced in Saudi Arabia, with deliveries expected to commence in 2026. Nonetheless, SAMI has not limited itself to agreements
Western Manufactures Losing Ground
Turkey's growing participation in developing the GCC’s arms industry comes as Western manufacturers have been unable to fully exploit the region’s growing demand for arms. Although the West continues to be the arms provider of choice, Turkey has been able to exploit a unique position. As a member of NATO, its weapon systems do not carry the same stigma as Chinese or Russian armaments in Washington, whilst it is not hamstrung by political considerations, such as human rights concerns, in the way many Western manufacturers are.
After Abu Dhabi and Riyadh’s 2015 intervention in Yemen, there has been particular scrutiny over the ethical implications of weapons exports due to the severe humanitarian crisis caused by civilian casualties, blockades, and alleged violations of international law as a result of Saudi Arabia and the UAE’s conduct. Former German Chancellor Angela Merkel blocked the sale of 200 Leopard 2A7 tanks to Saudi Arabia due to human rights concerns in Yemen. Additionally, the German government had opposed the sale of a second tranche of Eurofighter Typhoons to the Saudi Air Force until the end of 2023. Germany said it would lift its blockade in January 2024 only after Riyadh approached France about potentially purchasing Rafale jets.
If GCC nations were to develop their own arms industry, it would allow the region to take security and foreign policy decisions with less external restriction, reducing dependency on Western governments. Although big ticket items such as combat aircraft, ships, and tanks are primarily procured from Western manufacturers, indigenisation endeavours done in conjunction with Turkish suppliers remind the west that alternatives exist. In addition, the question of technology transfers and indigenisation programmes have proven controversial for Western manufacturers due to China’s increasing footprint in the Middle East. Fears that sensitive military technologies might end up in Chinese hands are compounded by increasing technological cooperation between GCC and Chinese entities. For example, the Trump administration had agreed to sell the UAE military F-35s as part of the Abraham Accords, only for the Emiratis to pull out of the deal due to too many constraints imposed by the US to prevent its technology from being stolen by China.
Nonetheless, cooperation with Turkish armament firms remains limited to smaller-scale goods such as drones, small vehicles, light arms, and munitions. Although there have been bigger projects (such as Qatari participation in the Altay main battle tank project.) It is to be seen whether this cooperation will expand to larger platforms given the modest success of domestic arms production in the GCC. As Turkey’s removal from the F-35 programme deprived it of a carrier based aircraft, it has developed new carrier capable UAV models for its amphibious assault ship the TCG Anadolu. The success of its carrier based UAVs would be of relevance to GCC states given their extensive coastlines along the Red Sea and Persian Gulf. Both bodies of water have seen increased militarisation as Houthi rebels strike commercial shipping in the Red Sea, and Iran has steadily increased its own naval capabilities and infrequently targets commercial shipping. Additionally, the Anadolu was constructed with technology transfers from the Spanish shipyard Navarre, suggesting that Turkey is increasing its shipbuilding capabilities. Integrated weapons platforms capable of operating across 2 domains (air and sea) are likely to increase the likelihood of Turkish and GCC states partnering to construct larger weapon’s systems. SAMI also has existing relations with Navarre, with which it entered into a joint venture and constructed 5 Avante 2200 corvettes for the Saudi Arabian Navy.
Looking Forward
Alongside an increasingly independent foreign policy, and with the growth of its domestic arms industry, KSG assesses that Turkey will continue expanding its influence amongst GCC states and enhance its ability to shape the politics of the Gulf. As a NATO member, Turkey and its domestic arms industry are ideally placed to address Saudi Arabia’s attempt at economic diversification and indigenisation, as it is unlikely to aggravate Washington in the manner increasing Chinese or Russian arms sales to the Gulf would.
Global arms manufacturers will continue to make the GCC a prime target as a key export market, due to the region's continued upward trends in international procurement. In 2023, Saudi Arabia had the world’s fifth-largest military expenditure, whilst military expenditure in the Middle East rose 0.9%, reaching $200 billion in 2023. KSG assesses that procurement of armaments in the Middle East will continue to rise. Rising tensions in the region due to the Israel-Hamas war, border skirmishes between Israel and Hezbollah, and frequent violent encounters between Israel and Iran, raise fears about a potential escalation in violence and incentivises continued arms purchases. Growing defence budgets provide the means to increase procurement, and opportunities for defence companies.
Turkish arms manufacturers are well placed to capitalise on this trend. Turkish armaments are well regarded given their relatively low cost and high quality, being more cost-effective compared to Western alternatives. This also makes them well-suited for sale to middle-income countries beyond the GCC. An example of this is Turkey’s Bayraktar TB2 drone, which as of 2023 has been delivered to 31 states. In addition, Turkish firm’s willingness for cooperation and technology transfers aligns with domestication efforts in the GCC. Such domestication efforts also represent continued opportunities for joint ventures for foreign firms. These include assembling airframes for drones, producing local variants of foreign licenced small arms and vehicles, and setting up research centres that help improve domestic R&D capabilities.
Turkey is currently also filling the gap for smaller weapons platforms. However, it also has ambitions to construct larger products, as demonstrated by the joint Spanish-Turkish venture to construct the Anadolu and agreements with BAE systems to aid in the development of a Turkish 5th-generation fighter aircraft. Larger weapons systems present opportunities for Western firms to participate. Navarre’s participation in both Saudi and Turkish naval projects demonstrates that Western states are the primary suppliers of big ticket items. Western companies can utilise existing relations with both GCC and Turkish firms by offering armament deals that involve itself and the two additional parties. In doing so Western firms can piggyback on existing regional trends, whilst also ensuring consortiums are driven by Western states. In turn, this would allay western fears of China increasing its foothold in the region.
Germany’s decision in January to change its stance on Eurofighter Typhoon sales to Saudi Arabia suggests a shifting stance on arms sales to countries it considers as having problematic human rights records. Although other European states, such as France, have continued to sell armaments to the GCC, Germany’s blockade of exports has frustrated several European allies and even threatened future bilateral projects. However, KSG assesses that due to the changing security situation in the Middle East, changing views in the European capitals regarding Saudi Arabia and the UAE’s intervention in Yemen, as well as growing concern in the West over the availability of Chinese alternatives, the German government will reduce its resistance to European arms manufacturers attempts to sell their products to Middle Eastern states. In addition, many European states are in the process of developing next generation weapons platforms such as the German/Franco/Spanish FCAS and British/Italian/Japanese GCAP sixth generation fighter jets. Given the high cost of such development programmes and budget constraints among European states, these programmes are likely to look for cooperation partners and a wide range of export targets in order to reduce costs. Saudi Arabia has been vocal about joining the GCAP programme in the past, announcing its participation before the British government denied any agreement had occurred. However, Japan has continued to voice their approval of Saudi participation and KSG does not rule out Riyadh’s potential participation in the project.