Crises and regime changes in the Arab world reshaping global arms market
While the huge humanitarian catastrophes from the ongoing social protests and eonomico-political upheavals in the Arab world have drawn global attention and due condemnation, the redistribution of the region’s lucrative multibillion-dollar arms market between the ‘gainers’ and ‘losers’ of geopolitical influence in the restive region has become a ‘hot discussion and speculation subject’ among international defense experts closely monitoring the rapidly changing landscape of today’s Middle East reality.
The real identities of the ‘secret string pullers’ behind the forces that have sent decades-long stable Arab states into free gravitational falls have so far eluded detection, but the general consensus among global security experts is that it will be, at least, naive to attribute the ‘tectonic shifts’ in Arabs’ collective conscience and mentality only to social networking among educated young Arabs on their Twitter and Facebook account pages.
For instance, some Russian defense analysts, still thinking much along the East-West bloc philosophy or related stereotypes shaped by forces of Cold War era inertia, see the United States as the ‘hidden hand’ pulling the strings behind the events unfolding across the Arab world. But, unlike in the old Cold War days, when such convoluted conspiracy theories usually saw Washington trying to undermine the Soviet might on the geopolitical arena, today, however, the object of the United States is no longer Moscow, but Beijing, whose rising economic might and international influence have made it the No. 1 challenger to Washington’s traditional hegemony on global issues, including in the Middle East.
How all these changes will undermine China’s influence in the region is yet to unfold, but all the traditional geopolitical superpowers that have long played decisive roles in Middle East’s life will certainly experience a significant redistribution of their spheres of interests in this highly volatile region that is also equally abundantly endowed with industrial resources by nature. “A probable worst case scenario outcome of these changes going in the Arab states of Egypt, Tunisia, Yemen, Libya, Bahrain, etc. could be the repetition of the situation in Palestine in 2006, when the terrorist Hamas organization rode the prevalent anti-government protest moods to beat the then-incumbent liberal FATH party in a free and fair parliamentary election to change the political leadership on the Gaza Strip,” Evgeny Satanovsky, the president of the Middle East Institute, said.
The losers are Russia and . . .
Experts agree that it is rather too early to compute the exact losses from these events as their final outcomes are yet unknown, as the expected losses will be directly proportional to the length and gravity of the implications of the revolutions in each country in question and the whole region in general. However, despite all these negative socio-political events, it is clear that most of the Arab world, notably, the deep-pocketed countries that are members of the Council of the Gulf State Cooperation, will soon embark on defense speeding spree, estimated at about $68bln in this year alone.
The question now is whether this plan is still feasible under the current volatile situation in the region, and if still viable, who then among the global arms dealers will get the lion’s share of this arms acquisitions bonanza. Global arms dealers are hoping that these negative events will not affect the Arabs’ defense spending spree habits. For instance, Dennis Kayvin, Lockheed Martin deputy president, recently said he expected the UAE to pen a contract for a super-modern anti-air raids system valued at $7bln this spring. Similarly, Viktor Komardin, deputy of Rosoboroneksport, the official government agency tasked with handling Russia’s defense gadgets abroad, has said the events in the Middle East have yet to negatively impact on Russia’s orders portfolio in the region.
“It will be naive to attribute the ‘tectonic shifts’ in collective conscience of Arabs, who are traditionally loyal to their elders and rulers, to only active social networking among educated young Arabs on Twitter and Facebook.”
However, the losses are expected to come in the long run, as most of the governments in the region — both the old and new ones — will likely be forced by post-revolutions circumstances to spend more on social issues, rather on defense gadgets procurements. “It is clear that no matter the outcomes of these events, the governments that will emerge from these revolutions will have to spend more money on other purposes than on defense issues,” Ruslan Pukhov, the director of the Center of Analysis of Strategies and Technologies, said. A similar view was offered by Igor Korotchenko, the director of Center of Analysis of Global Arms Trade, noting that most of these Middle East states that had previously intended to go on a spending spree prior to the revolutions will now have to make funding of welfare and social programs their top priority.
Economically, one of the biggest losers in the redistribution of this region’s arms trade market that will certainly follow the political upheavals and regime changes in the Gulf states will be Russia, which is expected to lose billions of dollars via missed profits, defense contract cancellations, failures or outright refusals by the new regimes to honor the countries’ previous agreements signed by their deposed presidents, etc. Currently, according to Rosoboroneksport, Russia’s defense orders portfolio, as at the beginning of January 2011, stood at $38.5bln, a figure the agency says it hopes to boost further by about $9.5bln during the year. But such optimistic forecast was made prior to the outbreak of social and political crisis in Tunisia in mid-January, which later spread to Egypt and from there to the rest of the Arab world.
Now it is clear that Russia will not be able to achieve such a lofty market target this year, a reality evident in the fact that Russian defense industry officials have tentatively estimated Moscow’s losses from the UN-backed sanctions against defense related cooperation with Tripoli at $4bln, while there is now a big question mark over the defense equipment deals valued at the $4.5bln with Algeria. In all, Russia’s aggregated losses in defense contracts with the Arab states could reach between $10bln-$15bln, including missed profits and revenues expected from after-sales services and management. Evidently, most of the Arab states, where the political turmoil had already led to regime changes, for instance, Egypt, and other areas such as Libya, where the mass protests have spun out of official control, as well as several other countries in the region, where such protests have now assumed latent or protracted character such as Jordan, Yemen, Syria, etc, are traditionally partners in defense cooperation with Russia.
To bring Russia’s expected losses into perspective, it needs be stated here that about $12bln, or about 30% of all Russia’s existing defense contracts valued at almost $40bln, are from contracts penned with Arab countries. “Besides, one needs to factor into this equation the fact that most of the Arab states that are not currently facing social mass protests could also freeze arms purchase for the time being,” Korotchenko said. It is uncertain at the moment how the protests in these countries — now divided along social, ethnic, geographical, religious and other divisive lines — will eventually play out. But one thing is clear, and that is most of these Arab states, if not all of them, will most unlikely return to the ‘pre-mass protests status-quo’ that bred the crises and/or can continue ‘doing businesses as usual, and this includes international cooperation with other countries, including on defense issues.
Exuding confidence, Rosoboroneksport Director Anatoly Isaikin said that there was no reason to dramatize Russia’s probable arms contract losses in connection with the upheavals in the Arab states. “Naturally, we are concerned over the events going in these countries, despite the fact that we don’t expect them to have any significant impact on our defense contracts portfolio,” he added. “We don’t have any defense cooperation with Tunisia, so the upheavals will not impact on our portfolio, while we do not intend to halt our cooperation with Egypt, as it is not under any UN sanctions.”
However, Vladimir Chamov, the Russian ambassador to Tripoli recently fired by the Kremlin over his caustic criticism of the government’s official policy, notably, its refusal to veto the now-controversially famous UN no-fly resolution that sanctions NATO-led air raids on Libya, did not share other Russians’ optimism. “Apart from the defense contracts, our countries have also strongly boosted their economic ties in recent times. Therefore, it is not in Russia's best interest to lose such partner as Libya at this point in time,” the ex-envoy noted. “Russian companies have invested hundreds of millions of dollars in oil and gas exploration in the country, others such as Russian Railways Corp. was executing a $3.1bln contract to develop new railway lines system,” he added. “In all, Russian corporations have concluded contracts for several years ahead worth tens of billions of U.S. dollars/euros, which we could lose and we have lost. Seen in this context, the government’s policy, in a certain sense, can be considered a betrayal of Russia’s interests.”
Another expected negative fallout from these events for Russia is their potential to exacerbate the ongoing radicalization of Russia’s restive North Caucasian region, a point raised by Prime Minister Vladimir 
Putin at a February meeting with European Commission President Jose M. Barrosso. “We fear the rising influence of Islamic radicalism in the Arab world could spread to other regions across the globe. Specifically, we are seriously worried over the possibility of these events negatively impacting on the situation in our North Caucasus.”
Western states and Israel are also on the losers’ side
Another huge loser in the conflict is the West, most notably, the United States, which prior to the crisis, and with the exception of the radical Hamas and FATH leaderships in Palestine, held an absolute hegemony over the whole Middle East’s political, defense and economic lives. Now after soft pedaling, and later, finally siding with protesters against ex-Egyptian President Hosni Mubarak, Washington has betrayed most of its allies of the same ‘political pedigree’ as Mubarak in the region. This was particularly unpalatable to the allies in the region, especially as the dethroned Egyptian leader and other pro-western leaders was seen and despised by Islamic radicals and indeed throughout the entire Arab world as Washington puppets. “The Mubarak regime was seen by the revolutionaries as a stooge of the United States, one of the major reasons that catalyzed his eventual downfall,” Leonid Ivashov, the director of the Moscow-based Academy of Geopolitical Problems, said.
Similarly, U.S. caustic criticism of ‘the excessively disproportionate military forces’ used by the Bahraini monarchy to disperse the protesters in Manama, the capital, and other cities has also alienated Washington among the members of the ruling royal family and the nation’s political elite. Today, the only standing U.S. ally in the region is Saudi Arabia, whose future also remains cloudy following the ongoing social protests in the country, despite the government pumping over $36bln into social and other welfare programs aimed at improving the disgruntled citizens’ lives. “The ongoing Shiite-led waves of mass protests could eventually destabilize Saudi Arabia and possibly divide it into two parts, with the western part going under the Al-Qaeda influence, while the eastern half will come under the Shiite dominance, effectively putting under Tehran’s control,” Satanovsky, from Middle East Institute, noted. “This will mean a real nightmare for Washington, indeed, nothing could be worse for the U.S. interests in the region.”
Materialization of any or all of these negative scenarios will mean that United States will lose its hegemonic share of the Middle East defense gadgets market, seen as the most lucrative in the world. For instance, the current total defense contracts signed by the U.S. government and defense corporations with Saudi Arabia alone is estimated at over $90bln, a figure that dwarfs all current arms contracts signed by Russia with the whole world.
Another loser in the changing political and defense landscapes in the Gulf region is Israel. For one, the fall of the Mubarak regime, seen as the only true friendly neighbor that legally guarantees Tel-Aviv’s right to exist in the region, has already dealt a serious blow to the Jewish state’s national security arrangements. Indeed, Israel is currently waiting to see how the ongoing transition of powers in Cairo will play out, and who will eventually be in charge of affairs at the end of the process. Here, the practical options available to Tel-Aviv are limited to three, none of which can fully satisfy Israel as it was under the Mubarak regime.
One of these options envisages the leaders of the pro-Western democratic protests coming to power, the best of the options on the table for Tel-Aviv, as this will mean Cairo’s ‘full honoring of all the existing agreements’ with Israel. However, this is also the major weakness of this option, because such policy will certainly alienate the new Egyptian leadership in the Arab world, thus raising the possibility of further instability and collapse of the government.
However, the rest two options, much worse than the first, will mean years of ‘sleepless nights’ for Tel-Aviv. This is because under these options the political powers could end up in the military brass’ hands, a better case scenario, or in the hands of the influential radical Islamic ‘Muslim Brotherhood leadership in the worst case scenario. In both cases, Israel can no longer count on Egypt as it had done over the last 
30 years under Mubarak. A sign that Tel-Aviv is already considering these two latter options as the most probable outcomes is underscored by the fact that it has increased its defense arrangements, whist actively exploring other alternatives to curtail a ‘probable unfriendly Egypt’ that could emerge from conflagrations in the worst case scenario.
Iran tops the crises winners lineup
Experts have named Iran, Syria, Turkey and China among the potential gainers from the ongoing shift of regional powers and spheres of geopolitical interests in the Gulf region. However, of this quartet, Tehran has so far gained the most, as the revolutions had effectively ended its tense relations with Mubarak’s Egypt over its marked west-leaning and friendly policies with Washington and Tel-Aviv, while the ongoing ‘radicalization’ in the newly liberated Arab world rhymes more with Iran’s rigid anti-West view aimed at countering the overwhelming U.S. influence in the region.
For instance, the new interim Egyptian leadership has granted Iranian Naval Forces ships permission to use the Suez Canal, a privilege that Mubarak had denied Tehran for years. It goes without saying that such gesture from the new Egyptian leadership did not go down well with Tel-Aviv, which had demanded explanations from Cairo as well as threatened to obstruct the passage of the Iranian vessels through the canal in the future.
Commenting on these latest trends that have significantly boosted Tehran’s position in the region, Rajab Safarov, the director of the Moscow-based Center for studying contemporary Iran, said the political winds of change in the region are in Tehran’s favor, because most of the Arab states undergoing revolutions, where the ruling elites have either fallen from ‘grace to grass’ or about to do so, used to have strain ties with Iran over their friendly ties with western powers. “Undoubtedly, Iran will certainly emerge as the sole leader of the Islamic Arab world from these political upheavals in the region.”
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