Defence partnerships can boost economic and regional security

The Middle East faces an extraordinary collision of economic and regional instability. Fluctuating oil prices threaten economies and cause shrinking military budgets while security threats deepen and diversify. I believe the defence industrial sector has an obligation to support governments in the region by developing sustainable industrial partnerships that deliver sophisticated but affordable and adaptable localised defence solutions.

I have worked in Africa all my life, a region that has always had significant security challenges and huge financial limitations, and as a result we had to think out of the box. The African continent has also always experienced asymmetrical warfare. There are many lessons that came out of this experience.

Preparing for these threats would be challenging under any circumstances and is made more complex by the global financial crisis and last year’s oil price crash. Put simply, all Middle Eastern leaders have no choice other than doing more with less. According to the most recent independent market data, a number of countries in the region has seen military spend decreased in the past year and other budgets are expected to taper in the coming year. At the same time, the nascent global trend of spending recovery—2015 was the first year since the global financial crisis that world military budgets rose, this means that nations in the Middle East who fail to act now will soon see their defence spending outmatched by other regions at a time when threat levels are rising.

Given these challenges, I firmly believe that governments in the region should be prioritising defence industrial partnerships to bolster both domestic innovation, economic development and national security. Most countries already have the necessary assets— the defence industry can expedite their development. For example, Jordan and the United Arab Emirates have developed their own companies, respectively the King Abdullah Design and Development Bureau (KADDB) and ADIC, which capitalise on their domestic talent and infrastructure and incentivise foreign investment and partnerships. The Saudi Arabian Deputy Crown Prince and defence minister Prince Mohammed Bin Salman also recently signalled he will seek to localise over 50 per cent of his military spend, challenging the defence industry to find new ways to support the Kingdom.

For young people in these host countries, eager to embark on a career in high tech industries, these partnerships represent a unique opportunity to learn from international experts. The skills and knowledge they acquire endure far beyond the contract, delivering long-term value to both national governments and local communities.

Given that industrial partnerships involve the end user during design and production, the technologies can be effectively localised to ensure it meets operational requirements. Appropriate technology should be the buzzword, especially in the Middle East where each nation faces uniquely challenging threats and terrains. With focused design, governments enhance their defence capability and avoid the problem of procuring imported equipment that was never designed to be suited exactly for local conditions and requirements. Technology and mindset are the key factors in reducing defence spending.

Innovative design should also lead to affordable design. New production methodologies and modern materials make it possible to integrate and construct sophisticated defence systems from commercial off-the-shelf components thus reducing costly technical risk. Innovative equipment is also increasingly multi-functional, able to stabilise diverse threats at one streamlined cost. Aeroplanes used to perform humanitarian aid drops one day must be able to survey national borders or vast deserts the following day. Armoured vehicles must be able to interchangeably fulfil a range of missions from field ambulance to a command and control centre. These features are not easy to develop, but they are imperative to responsive and affordable defence.

Stability in the Middle East is not only a question of regional security, but also of economic security. Through industrial partnerships, the defence sector should create a step change in industrial capability development that can enhance infrastructure, employment opportunities and affordability of security. Though I can’t predict precisely how today’s security threats will evolve, I do know how the defence industry should.

The defence industry must evolve into a collaborative industry, which creates partnerships where it is willing to share its technologies, create employment in customer countries and making a meaningful contribution to economic development through enhanced security.

Ivor Ichikowitz is the founder and executive chairman of Paramount Group