By Agnes Helou on October 05, 2023
Major defense contractors from the Gulf and in Turkey have, in recent years, made aggressive pushes to expand the export of their military products abroad, making a splash at international arms exhibitions from Abu Dhabi to Paris to São Paulo.
But come next week, when the Association of the United States Army (AUSA) hosts the largest annual defense exhibition in America with more than 650 exhibitors from around the globe coming to Washington, DC, those firms aren’t expected to show.
The reason, analysts told Breaking Defense, could be two-fold: First, as a seller, it’s difficult to break into the saturated American market, where major US and Western firms — and a horde of smaller ones — have a tight grip on their American customers. Second, as businesses look to partner with local firms, US export laws make it difficult for foreign companies to establish technologically intimate relationships with any would-be US-based counterparts.
That’s why, the analysts said, Gulf and Turkish firms appear to currently focus on other markets, keeping their powder dry for the opportunities, outside America’s borders, where they stand the best chance to make deals.
Kristian Alexander, a senior fellow at the TRENDS think tank in Abu Dhabi, told Breaking Defense, “Gulf defense firms might prefer to participate in regional defense exhibitions that are closer to home, where they can showcase their products and engage with a more geographically relevant audience. These regional events might better serve their marketing and business development needs.”
Business With The Gulf
Breaking Defense has recently reported on several moves by Gulf firms to widen their customer base abroad, including a particular interest in the Brazilian market.
But Jonathan Lord, director of the Middle East security program at the Center for a New American Security, told Breaking Defense that when it comes to US-Gulf arms sales, it’s typically been a one-way street.
“US-Gulf defense cooperation continues. There’s no question that Gulf states are exploring relations with a broader range of suppliers, and also seeking to develop their own defense industrial bases, but Washington remains the go-to, top-shelf supplier for defense articles,” he said.
Beyond directly advertising their wares, defense expos like AUSA also allow companies to interact with one another, as well as with government organizations, and potentially develop joint ventures or other international partnerships.
But Alexander said US export laws can make that a relatively unique, significant challenge.
“One possible reason could be US export restrictions on advanced military technology,” he said. “Gulf countries have sought advanced technology transfer in the past, but there may be limitations on what can be transferred due to concerns about technology protection and regional stability. These restrictions might make it less appealing for Gulf defense firms to participate in an expo where they cannot showcase or discuss certain advanced technologies.
“While they continue to collaborate with the United States on various defense initiatives, they might prioritize engagement with other defense technology providers to maintain flexibility in their procurement strategies,” he said.
Other markets, he said, may appear more lucrative both for sales and partnerships.
“[United Arab Emirate’s] EDGE Group and [Saudi Arabia’s] SAMI may be pursuing a strategy to diversify their global partnerships and customer base,” he said. “Participating in European expos allows them to engage with a wider range of international defense companies and potential customers beyond the US market.”
He added that European defense expos like DSEI and the Paris Air Show offer access to advanced European defense technologies and innovations, which could be appealing to Gulf defense firms looking to enhance their technological capabilities and expand their supplier network beyond the US.
He also noted several Gulf nations have been prioritizing domestic defense production, so seeking out American partners maybe not be a priority to begin with.
“These efforts may lead them to prioritize partnerships and exhibitions that align more closely with their goals of developing indigenous capabilities,” he said.
And while Lord said the US is a key international partner in the Gulf, Alexander suggested some strained ties between Washington and Gulf capitals could also make Gulf firms less enthusiastic about a visit to America’s capital.
From Ankara, With Little Love
One nation for which strained geopolitical relationships is potentially playing a larger role in defense firms’ decision-making is Turkey.
Turkish giants like Aselsan, Turkish Aerospace Industries, Roketsan are skipping the event, with only metal materials supplier Repkon and small arms producer Canik representing Turkish industry on AUSA’s exhibitor list.
“Turkish defense contractors’ interest and participation in defense exhibits in the US has customarily been low, at least in comparison with defense showcases in Europe, Near East and East Asia,” military and security studies analyst and associate professor at Izmir University of Economics in Turkey, Sitki Egeli, told Breaking Defense.
With the exception of parts and components the US buys as part of “offset trade obligations,” Egeli said that US has not been a major customer for Turkish firms historically.
“US and American markets [are] not seen, treated, and targeted as priority export markets by Turkish defense companies,” he said. “Over the decades, US defense market have been a very hard nut to crack for Turkish defense companies.”
Echoing Alexander, Egeli said “absurdly restrictive and obstructive” US defense regulations and policies also hamper further cooperation.
Elsewhere in the world, he said, Turkish defense firms have been flourishing, as they see defense shows in Europe as more promising and rewarding international meeting points to showcase their products and to reach out to their potential customers and industrial partners not only in Europe.
“From late-1990s onwards, with the Turkish defense companies exploring and gradually opening up to the world defense markets, exhibits in Near East and East Asia also entered in their scope,” he said. “Most recently, widely attended defense shows held in Turkey proper are also proving popular and attractive for established and startup Turkish companies alike.”
What’s certainly not helping: the current state of US-Turkish relations.
“The last five or six years, those relations have truly hit the rock bottom,” he said. “So much so that Turkish-defense relations are possibly at their lowest point since the beginning of the Second World War. Under such circumstances, when Turkish contractors do not see the slightest export prospect toward US markets, and when they are fully aware that their industrial or technological cooperation with America counterparts do not stand the slightest chance of receiving export license or authorization from US [Department of State] and [Department of Defense], why should they spend their money and time with US defense shows?”
@Breaking Defense