The three engines with which Saudi Arabia is building up its own military industrial sector
- The key to entering the Saudi defence market
- Strategic alliances and consolidation of the national industrial fabric
It is evident that Saudi Arabia is not by chance the host country for the talks between the United States and Russia aimed at stopping the war in Ukraine and ensuring a lasting peace.
The Saudi authorities, starting with their prime minister, Crown Prince Mohamed bin Salman Al-Saud, have a good and special relationship with the Trump Administration. Also with President Putin's Russia. The Riyadh government has not taken sides in the war in Ukraine, has not imposed sanctions against the Kremlin and both Saudi Arabia and Russia are the main crude oil producers in the Organisation of Petroleum Exporting Countries (OPEC).
The oil wealth of the Saudi kingdom, its economic strength, its political stability and its 37 million inhabitants, together with its large territory - four times the size of Spain - and the religious influence it exerts over the global Sunni community have made the country an important diplomatic actor with a global reach.
However, in order to become a world power, Saudi Arabia needs to have a large and well-equipped armed forces, which it has, and its own military industrial sector to supply them and ensure the maximum possible degree of strategic autonomy. And the authorities in Riyadh are immersed in this endeavour, in particular Prince Khalid bin Salman bin Abdulaziz Al-Saud, who has been Minister of Defence since October 2024.
The pillars on which the growth of the Saudi defence industrial fabric is based are headed by three organisations. The highest ranking is the General Authority for Defense Development (GADD), a government entity with its own legal personality directly attached to the prime minister. Created in September 2021, it is responsible for defining the objectives of research, development and innovation activities in the fields of defence technology and systems, as well as their direction and supervision in accordance with the laws and regulations of the Kingdom.
The key to entering the Saudi defence market
As important as or even more important than GADD is the General Authority for Military Industries or GAMI, an acronym for General Authority for Military Industries. Created in August 2017, it is the key body which, with the approval of the GADD, is the gateway for defence contractors from third countries to sell weapons systems, platforms and services to the Saudi Ministries of Defence and Interior. Also to the National Guard, responsible for protecting the borders, oil fields and their infrastructures.
The raison d'être of GAMI is to regulate, develop and supervise military equipment policies to meet the essential needs of the Kingdom in the areas of air, land and naval weapons systems, as well as in the fields of armaments, ammunition, missiles and defence electronics. Its responsibilities also include strengthening the national defence production base and granting licences to military industries wishing to set up in Saudi Arabia.
GAMI is headed by the engineer Ahmad Abdulaziz Al-Ohali, who recently confirmed in a public act that ‘Saudi Arabia's military spending in 2024 amounted to 75.8 billion dollars’, the highest in the Arab world. He also explained that the budget for the current year ‘amounts to 78 billion, which represents 7.1 per cent of Saudi Arabia's GDP’.
As the body responsible for implementing the strategy of localising defence industries in Saudi Arabia, GAMI requires that foreign companies aspiring to make large sales in the country contribute to developing the industrial capacities of the Saudi kingdom through technology transfer, local production and the provision of qualified training and employment for Saudi personnel. This is in line with the Vision 2030 objective, which aims for the national contribution in defence procurement to reach 50 per cent of the Kingdom's military needs by 2030.
According to Al-Ohali, the localisation rate of military industries has increased steadily and by the end of 2023 it was already at 19.35 per cent. Such a rate of growth is in line with the Saudi Vision 2030 objective, the aim of which is to reduce dependence on oil revenues, increase the private sector's contribution to the Saudi economy from 40 to 65 percent and increase non-oil GDP from 16 to 50 percent to achieve a diversified and sustainable economy.
Strategic alliances and consolidation of the national industrial fabric
GAMI is focused on creating opportunities and favouring investments by foreign companies so that they participate actively in the creation of military capacities and in the development of the domestic defence industrial fabric. In collaboration with other government agencies, its tasks include offering financial incentives to investors, large companies and national and international SMEs specialising in the aerospace and defence sector.
An extensive prospective study sponsored by GAMI has identified that the Saudi defence market offers significant business opportunities in 74 areas of activity. The document also highlights the existence of 30 priority investment opportunities, which represent around 80 per cent of the total future expenditure of the supply chains.
The executive arm of GAMI is the Saudi Arabian Military Industries (SAMI) group, a corporation founded and backed in May 2017 by the Saudi sovereign wealth fund PIF to help reduce the Kingdom's dependence on military imports from third countries. The baton of SAMI has just changed hands and since 1 February it has been under the executive direction of Thamer Al-Muhid, an engineer with 30 years of experience in mergers, acquisitions and business transformation.
With more than 3,500 employees in September 2024 and organised into five business divisions - SAMI Land, SAMI Aerospace, SAMI Sea, SAMI Advanced Electronics and SAMI Defense Systems - SAMI's activity is focused on setting up joint ventures with foreign companies to execute contracts, with the stated objective of becoming one of the 25 main and largest industrial defence organisations in the world by 2030. SAMI wants to achieve this by increasing production capacity through a combination of strategic alliances with third-country manufacturers and the progressive consolidation of the national industrial fabric.
Among the more than one hundred companies under the SAMI umbrella is the Spanish-Saudi joint venture SAMI Navantia, which, under the technology transfer from the Spanish shipyard, has developed the Hazem combat system for the Avante 2200 class corvettes already built in Spain or the three contracted in December 2024. Other Spanish companies are in the process of negotiating to set up and locate joint ventures in the UK.
Of course, large US corporations such as Boeing, Lockheed Martin and Raytheon, EU companies such as Airbus, Thales and Safran, and British companies such as BAE Systems, to name but a few, as well as manufacturers from Brazil, Korea and Turkey, to name just three countries, already have factories and joint ventures based in the Gulf country.