Albert Vidal Ribe
Saudi Arabia may be on the cusp of signing one of the biggest defence-cooperation agreements between a Gulf country and South Korea, underscoring how Seoul has become a new partner of choice in the region.
South Korean companies have signed a flurry of deals in recent years in the Middle Eastern and North African markets, which include some of the world’s biggest arms importers. The export agreements cover everything from ammunition to aircraft. Deals finalised in the past two years alone are valued at more than USD5 billion.
The budding relationship reflects a confluence of developments. Arab Gulf states are looking to diversify their sources of defence procurement and partnerships beyond their traditional Western suppliers. And Seoul can offer increasingly advanced equipment alternatives, often at competitive prices and with shorter lead times.
Gaining pace
Seoul’s efforts to gain a foothold in the Gulf’s lucrative arms market date back more than a decade but have recently gained pace as South Korean companies’ offerings become more credible. One of the early successes came in 2013 when Iraq agreed to buy T-50IQ trainer aircraft from Korea Aerospace Industries (KAI), although the programme encountered funding challenges before deliveries commenced.
Deals since then appear to be advancing more smoothly, with South Korea inking major defence-export deals with Egypt, the United Arab Emirates and Saudi Arabia. In February 2022, Korean defence company Hanwha signed a KRW2 trillion (USD1.55bn) deal to sell approximately 200 K9 Thunder self-propelled howitzers to Egypt. Also in 2022, LIG Nex1 signed contracts with the UAE to export a surface-to-air missile (SAM) system worth KRW4.29tr (USD3.32bn). Meanwhile, Hanwha, Poongsan and LIG Nex1 concluded deals with Saudi Arabia, collectively worth around USD989 million, for multiple rocket launchers, ammunition and electro-optical systems respectively.
Further Saudi deals could be imminent, with South Korean media reporting that Hanwha Defence and LIG Nex1 are seeking to sell the Biho-II air-defence system and the Cheongung KM-SAM system to Riyadh. In the maritime domain, HD Hyundai Heavy Industries has signed an agreement with Saudi Arabia-based International Maritime Industries to jointly bid for a USD2.5bn Saudi government programme for five frigates.
Egypt is also considering additional arms purchases, for example expressing interest in South Korea’s K2 battle tanks and the Cheongung II SAM system, and reportedly holding talks with South Korea’s defence industry and representatives from Hanwha and KAI to explore procurement of the FA-50/T-50 Golden Eagle.
Working together
South Korea’s arms deals have benefitted from a policy of facilitating local work at a time when many Gulf countries are investing heavily to build up their domestic defence-industrial base. As part of the K9 Thunder sale to Egypt, Hanwha agreed to jointly manufacture the self-propelled artillery with state-owned Abu Zaabal Tank Repair Factory at a facility just outside Cairo. Egypt could also secure local assembly of jet trainers should Cairo move forward on a potential deal for 100 T-50s.
Cooperative development projects are also on the rise. In January 2023 the UAE’s Tawazun signed an agreement with KAI to jointly develop a military multi-mission cargo aircraft known as the MC-X. The conglomerate nature of many South Korean companies can also be an asset in building local ties. A Hyundai subsidiary is building a marine-engine plant in Saudi Arabia while the company’s defence arm pursues the kingdom’s frigate contract.
South Korean companies have aggressively tried to expand their presence in the region by creating local ties. In the UAE, for example, Hanwha and LIG Nex1 have opened offices in Abu Dhabi to serve as a beachhead to pursue opportunities in the region and to support the implementation of existing contracts. LIG Nex1 and Poongsan also have offices in Riyadh. Saudi Arabia is requiring companies to set up their regional headquarters in Riyadh by 2024 if they want to secure business.
To help underpin these ties, South Korea signed several agreements with Egypt in February 2022, covering topics such as defence-industry cooperation, logistics support, and principles for joint research and development.
Path forward
South Korea’s arms dealings with the Gulf region are not headache-free. Seoul has not interpreted the country's Foreign Trade Act (which bans both the export of weapons to countries at war and the re-export of weapons without permission) as barring exports to the Middle East. However, the fact that key components of many South Korean platforms are from Germany, the United Kingdom and the United States means that they are subject to end-user and third-party-transfer restrictions from those countries.
Seoul is also not the only relative newcomer to defence exports that is seeking inroads in the Gulf. In August 2023, Turkiye struck its biggest-ever arms-export deal in arranging to sell the armed Akinci UAV to Saudi Arabia, in an agreement that includes local production. China has also been gradually expanding its defence trade with the region.
Meanwhile, Western countries are not ceding the field. France is aggressively pursuing multiple sales opportunities in Saudi Arabia, including for fighter aircraft. And Italy, Spain, the UK and the US, among others, still want their share of the business.
South Korea has clearly achieved a strong toehold in the market. Less certain is how much bigger its share of the Gulf business can become.
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