Posted on 11/20/2010 6:22:21 AM PST by sukhoi-30mki
$60bn in defence deals expected to lift Saudi economy
Ivan Gale
Last Updated: Nov 20, 2010
Boeing, which has orders for Apache helicopters, above, Little Bird helicopters and F-15s will shoulder most of the offset burden. AFP
Defence firms selected to provide Saudi Arabia with up to US$60 billion (Dh220.35bn) in arms and military aircraft will generate more than $20bn in economic benefits throughout the kingdom's economy in return.
The boost will come via the nation's offset rules, which require the contractors to help build ventures in other sectors of the economy.
Saudi Arabia's five planned economic cities, including the 173 square km King Abdullah Economic City, will become a major target of these investments, according to Grant Rogan, the chief executive of Blenheim Capital Partners, a consulting and financial advisory firm that specialises in defence deals. Other high-interest areas include education, information and communications technology and homeland security.
"The Saudi Arabian General Investment Authority [SAGIA] has a remit to develop economic cities and they see the potential of offset obligations as an excellent way of achieving national objectives," said Mr Rogan.
Offset deals have led to some of the Gulf's largest infrastructure projects including the Dolphin gas pipeline and Abu Dhabi's Al Raha Beach development. The UAE will increasingly look at ways to use offsets to further its strategic goals in the 2030 plan, such as transferring technology and industrial know-how, raising the skills and the employment levels of Emiratis and boosting exports, according to recent official statements.
Boeing is the largest recipient of a record Saudi arms package that includes orders for 84 new F-15 fighter aircraft and 70 upgrades of existing Saudi F-15s. The US firm will also supply 70 Apache attack helicopters and 36 AH-6M Little Bird light attack/reconnaissance helicopters. The company will shoulder the largest burden for offset deals.
Sikorsky is also a major player in Saudi Arabia, with orders for 72 Black Hawk helicopters. Other participants include Lockheed Martin, Raytheon and Textron, Mr Rogan said.
One potential development could be the establishment of data centres along the Red Sea, he added. "One of the four Tier 4 data centres in the world is in Abu Dhabi, and the Saudi's have aspirations for a capability of their own," Mr Rogan said. "Some of the ideal locations are along the Red Sea."
The requirements will trigger opportunities for offset firms such as Blenheim, which Mr Rogan said was in discussions with SAGIA and the defence contractors. "It is a massive obligation and we are looking at ways to participate," he said.
Previously, some offset deals in the kingdom focused on meeting the needs of the military's maintenance requirements, such as the creation of the Alsalam Aircraft Company and the Middle East Propulsion Company.
In addition, Saudi Arabia could follow its record arms order with equally large air and seaborne packages, including the Patriot and Thaad missile defence systems from Raytheon and Lockheed Martin and ships from General Dynamics and Lockheed Martin. "You could be looking at a total of $120bn, and it could happen in the next 12 months," said Mr Rogan.
igale@thenational.ae
......next Odumbo will send them all our sand at tax payer’s expense.
Can someone explain where up to 120 billion to build up a nice Saudi Arabia comes from? I don’t understand any of it.
That’s the approximate worth of all defense deals that the Saudis are expected to sign. But this will be spread out over several years. They signed a similar series of deals with the British spread out over 2 decades.
http://en.wikipedia.org/wiki/Al-Yamamah_arms_deal
This is so WRONG!!!!!!!!!!!!!!!!!!!
NO NO NO NO NO
Do not give the enemy one red cent of US money. NO
No problem. We’ll just borrow the money from China and raise our taxes so we can help the Saudi family. All the while, we are forced to buy their oil at inflated prices, even though we, it is said, have more oil than they do. This is the dumbest administration in the country’s history.
Unfortunately offsets are the name of the game in armssales since the 1990s. If the US doesn’t work out agreements, the Europeans, South Koreans, Russians or Chicoms will.
The question is what will US companies bargain for-My favourite example of an offsets proposal was between Germany and South Africa-
http://news.bbc.co.uk/2/hi/business/1672792.stm
http://findarticles.com/p/articles/mi_m0JQT/is_2003_June/ai_n25070057/
oh lord
that is a I am struck dumb by that one
A condom factory no less
Or it can be something like sourcing components and transferring technologies like General Dynamics/Lockheed and later Boeing did with the South Koreans when they selected the F-16 and F-15K. Or like up to 20,000 jobs that EADS has promised in new research institutions in India if the Eurofighter wins a big contract.
How about if we had “offset rules” that applied to Saudi oil imports?
For every dollar we spend on Saudi oil, they’ve got to buy $1 in U.S. agricultural or industrial products?
We could set terms like that if the arrogant bastard now occupying the White House would allow us to explore for oil!
Why doesn’t the nation/buyer spend the money directly on the infrastructure? The seller isn’t giving anything away for free. WTH?
That’s the point. Get foreign companies to invest and virtually build infrastructure from scratch. This can be in pretty much any conceivable sector and ultimately boils down to a game of concessions between buyer and seller.
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