Economic security


'The end of an era': oil price collapse may force Saudis to rein in arms spending

Saudi Arabia may be forced to forego new weapons contracts and delay already-agreed weapons purchases as a financial crisis grips the kingdom, experts predict.

The expected delay of new weapons deals could have long-term political repercussions for the country under the rule of Mohammed bin Salman, the crown prince and de facto ruler who has waged a bloody war with neighbouring Yemen.

Saudi Arabia is facing an unprecedented budget crunch because of the collapse of the oil markets and the global economic turmoil caused by the Covid-19 pandemic, which has reduced oil demand for the foreseeable future.

“I have no doubt, this is the end of an era. The era of the Persian Gulf having all this money is over,” said Bruce Riedel, a senior fellow at Brookings in Washington and 30-year veteran of the Central Intelligence Agency, who has served as an adviser on Middle East issues to several US administrations.

Saudi Arabia spent about $62bn (£51bn) in arms last year, making it the fifth largest spender on weapons globally. Although that figure was less than in 2018, it still represents about 8% of Saudi’s GDP, meaning that the country spent a larger portion of its wealth on weapons than the US (3.4%), China (1.9%), Russia (3.9%), or India (2.4%), according to research by the Stockholm International Peace Institute.