Localising Power: Saudi Defence Industrialisation as Strategic Bargain

• Commentary Middle East and North Africa
  by Emma Soubrier
• whatsapp

Saudi Arabia's budding defence industrialisation is first and foremost a political strategy. Long before it delivers any credible industrial self-reliance, it manufactures bargaining power-through capital allocation, storytelling-as-performance, and institutional entanglements. Since 2017, Riyadh has built a two-pillar defence-industrial machine-the General Authority for Military Industries (GAMI) to set the rules, and the Saudi Arabian Military Industries (SAMI) to execute-under a Vision 2030 pledge to localise half of military spending. The steady drumbeat of "local production" announcements and expo-floor MoUs invites a simple reading: capability gaps are closing, and self-sufficiency is within reach.[1] Yet these are wrong-or at least insufficient-benchmarks. What the Saudi project buys most reliably is strategic room, rather than technical autonomy.

That point is sharpened by today's shifting terrain. The 2023 China-brokered Saudi-Iran rapprochement formalised a de-risking instinct, while NATO's outreach-marked by the Secretary General's first-ever visit to Riyadh in December 2023-widened Western venues.[2] At the same time, Riyadh's distance from Washington has grown as the United States shields Israel's maximalist, militarised course-from its ongoing war on Gaza, widely characterised as genocidal, to Israel's June 2025 strikes on Iran's nuclear programme, condemned by arms-control experts as unlawful. The ensuing twelve-day war, including Iran's first direct strike toward a US target inside GCC territory, underscored why air-and-missile defence remains critical for the Kingdom even amid efforts to de-escalate. Most recently, Israel's strike in Doha-denounced at the United Nations as a flagrant violation of Qatar's sovereignty-both heightened Gulf threat perceptions and reinforced doubts about the reliability of US security guarantees.

This commentary sets out the narrated goals (diversification, localisation, "strategic autonomy"), takes stock of where things stand, and turns to where metrics are most successful-the political economy and financial plumbing organising Saudi "autonomisation".[3]

What is the narrated goal?

In official discourse, defence industrialisation is cast as an engine of economic diversification: a pipeline for high-skilled jobs, research and development uplift, dual-use spillovers, and prestige manufacturing capable of anchoring new industrial poles. The Saudi Vision 2030 explicitly braids economy and security-defence is portrayed as an enabling platform for the post-oil pivot. Under Mohammed bin Salman (MBS), these efforts and narrative have been very similar to, and credibly inspired by, Mohammed bin Zayed (MBZ) in the United Arab Emirates (UAE). It is worth noting how the biennial World Defense Show (WDS) in 2022, which performs this ambition as much as it builds it, was explicitly marketed as a rival to Abu Dhabi's IDEX (the International Defence Exhibition & Conference), held for the first time in 1993.[4] The point is to signal investor-readiness and policy seriousness to domestic and external audiences alike.

A second element is capability localisation. The language is one of "autonomisation": taking on larger shares of procurement, insulating against shifts in supplier politics, tailoring systems to local missions, and gradually moving up the value chain. This became especially salient when traditional partners debated freezing or delaying arms exports to Saudi Arabia, underscoring the fragility of dependence.[5] The message projected is that Riyadh can shape its own security future-reinforced through high-profile announcements of local production milestones and integration centres.

Last but not least, defence industrialisation is cast above all as a pursuit of sovereignty-often glossed as strategic autonomy. Localisation is presented as a means to hedge against over-reliance on single partners, particularly the United States, which has appeared less dependable as a security guarantor-most strikingly in its muted response to the 2019 oil facility attacks, feeding speculation about the Carter Doctrine's demise. Doubts extend to Europe. Industrial policy is thus embedded within a broader diplomatic grammar: de-escalation with rivals, diversification among great powers, and localisation as a political lever in an increasingly multipolar order.

Where do we stand?

On diversification, movement seems real, and official hopes are high. Khaled Ramadan, chairman of the International Center for Strategic Studies in Cairo, recently described Saudi military industries as a "cornerstone" of diversification, projecting a SR14 billion ($3.7 billion) contribution to GDP by 2030 and 40,000 jobs in engineering and electronics.[6] Such optimism reinforces the idea that localisation can spill over into advanced manufacturing and non-oil growth. Yet, evidence remains scant: oil still dominates the Saudi economy, and while non-oil activity grew 4.6 percent in the second quarter of 2025, the defence sector's diversification impact is still largely aspirational. As Omar al-Ubaydli has argued, defence manufacturing is highly capital-intensive, weakly connected to the wider economy, and generates limited spillovers - making it a poor candidate to drive broad-based diversification when absorptive capacity is the real constraint.[7]

On localisation toward self-sufficiency, progress is tangible yet deceptive. GAMI reports localisation rose from 4% in 2018 to 19.35% in 2024.[8] Successes include Maintenance, Repair and Overhaul (MRO), land-systems, C2 software, corvettes, and drone payloads-such as the Hazem combat system for Avante 2200 corvettes, CETC-linked drone components, and, most emblematically, the first locally produced THAAD launcher parts in 2025. Yet these headline figures often mask reliance on export-controlled supply chains: "local" awards mean assembly and integration, not autonomy. Industrial independence remains out of reach, even as localisation delivers bargaining leverage and the optics of capability.

On strategic autonomy, the network of suppliers is wider, but the architecture remains firmly bounded to the United States. Riyadh has multiplied its options, bringing in Korean partners for K9 howitzers and Chinese firms for UAV subsystems, among others. Yet the backbone of its security apparatus is still American-above all in missile defence and operational integration. It is worth underlining that neither China nor Russia seem to have the appetite or credibility to replace the US in its role of security guarantor anyway. This is not a zero-sum game of substitution, but a strategy aimed at gaining room to manoeuvre: a hedging game that Saudi plays with growing efficiency, as alternative metrics reveal.

What lies beneath?

Stepping back from factory counts and localisation percentages, the most immediate function of Saudi defence industrialisation is political. Capital-intensive projects centralise control over budgets, offsets, and licensing; they consolidate authority, distribute patronage through remodelled channels, and symbolically anchor leadership priorities under Vision 2030's modernising gloss. As Neil Partrick put it, Saudi military reform "boils down to better cash control and a modest domestic defense industry"-with money as a tool to deepen political authority and claim domestic credibility.[9] The diversification claim thus coexists with an internal-power logic: defence industrialisation operates less as an engine of productivity than as a state-led coordination device and nation-branding platform, embedding rentier bargains in militarised form.

This political work sustains itself not only through budgets and institutions but also through performance and storytelling. Saudi Arabia's first pavilion at Eurosatory 2024 in Paris, organised by GAMI, projected technological ascent and industrial credibility, even hinting at export potential. The appearance of capability often is capability: visibility shapes expectations, deters doubt, and-at best-buys time for slower build-up.[10] The parallel with sustainable energy is telling: the announcement of mega-projects performs resilience and attracts capital, regardless of whether they ultimately deliver. Defence industrialisation operates in the same register, where spectacle yields not just symbolic reassurance but reputational assets that can be mobilised diplomatically long before material autonomy is achieved. Narrative, in this sense, is constitutive of power.

A deeper layer lies in the financial architecture that organises Saudi Arabia's defence "autonomisation." Much of what passes for localisation is in fact about embedding foreign primes into Saudi markets and governance networks. As Shana Marshall notes, the rise of "landed companies" in the Gulf-subsidiaries like Saab UAE or Raytheon Emirates and, to come back to the Saudi case, BAE Systems Arabian Industries-binds external firms structurally to local priorities. Riyadh's "regional HQ" policy, pushing multinational corporations to relocate their headquarters in the country, and offset rules serve the same function, folding production into a state-controlled web of capital and licensing. These create institutional entanglements that complicate export bans, redirect flows of finance and expertise, and extend Saudi agency into opaque transnational circuits.[11] What emerges is that defence industrialisation manufactures less independence than interdependence-on Saudi terms, to enlarge its bargaining power and strategic latitude.

[1] Mohammed al-Kinani, "Saudi Arabia's drive to build a defense powerhouse", Arab News, August 9, 2025, https://www.arabnews.com/node/2611276/business-economy

[2] Kristian Coates Ulrichsen, "De-Risking the Neighbourhood: The Security Politics of Saudi Vision 2030" (pp. 21-32) and Cinzia Bianco, "Policy Recommendations for the EU: Seizing the Gulf's Connectivity Momentum" (pp. 133-138), in Eleonora Ardemagni (ed.), The Security Side of Gulf Visions: Adapting Defence to the Connectivity Age (Milan: Ledizioni/ISPI, 2024).

[3] Several themes build on my earlier study-Emma Soubrier, "The Gulf defence industry at the cutting (h)edge of multi-level power strategies", Defense & Security Analysis (advance online publication, 28 August 2025)-updated and revisited here with a Saudi-specific focus.

[4] Saudi-US Trade Group (SUSTG) Team, "Coming Soon to Saudi Arabia: A 'World Defense Show' to Rival Abu Dhabi's IDEX," SUSTG.com, https://www.sustg.com/coming-soon-to-saudi-arabia-a-world-defense-show-to-rival-abu-dhabis-idex/.

[5] Shady Mansour, "Diversifying Saudi's security: Would the US security architecture in the Middle East be threatened?" PRISME Initiative, June 5, 2023, https://prismeinitiative.org/publications/diversifying-saudis-security-would-the-us-security-architecture-in-the-middle-east-be-threatened/.

[6] Cited in Mohammed al-Kinani, "Saudi Arabia's drive to build a defense powerhouse".

[7] Omar Al-Ubaydli, "The Potential Drawbacks Associated with Domestic Military Manufacturing in the GCC Countries," PRISME Initiative, October 19, 2023, https://prismeinitiative.org/publications/potential-drawbacks-gcc-military-manufacturing-omar-al-ubaydli/.

[8] Saudi Press Agency (SPA), "GAMI Governor: Localization of Military Expenditure Reaches 19.35%, Compared to 4% in 2018," SPA.gov, November 21, 2024, https://www.spa.gov.sa/en/N2211485.

[9] Neil Partrick, "Saudi Arabia's Elusive Defense Reform," Carnegie Sada, November 14, 2019, https://carnegieendowment.org/sada/2019/11/saudi-arabias-elusive-defense-reform?lang=en.

[10] Emma Soubrier, "The Gulf defence industry at the cutting (h)edge of multi-level power strategies".

[11] Shana Marshall, "The Role of the Gulf States in Expanded Weapons Production in the Global South," PRISME Initiative, November 29, 2024, https://prismeinitiative.org/publications/role-gulf-states-expanded-weapons-production-global-south-shana-marshall/.