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The Arab Gulf States and Iran: Military Spending, Modernization, and the Shifting Military Balance

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The Arab Gulf States and Iran: Military Spending, Modernization, and the Shifting Military Balance Center for Strategic and International Studies 1616 Rhode Island Avenue NW Washington, DC 20036 Phone: 1.202.775.3270 Web: www.csis.org/burke/reports The Arab Gulf States and Iran: Military Spending, Modernization, and the Shifting Military Balance Anthony H. Cordesman with the Assistance of Nicholas Harrington Arleigh A. Burke Chair in Strategy [email protected] Second Working Draft December 12, 2018 Please send comments, corrections, possible additions to Photo: STR/AFP/Getty Images [email protected] The military balance between Iran, its Arab neighbors, and the United States has been a critical military issue in the Middle East since at least the rise of Nasser in the 1950s. The risks this arms race presents in terms of a future conflict have not diminished with time, and many elements of the regional arms race have accelerated sharply in recent years. This report compares a range of sources to trace the history of the Gulf arms race in terms of military expenditures, arms transfers, and comparative rates of military modernization. In the process, it examines the economic burden on the Gulf states of these military expenditures and arms transfers, the recent shifts in the balance in terms of the major elements of conventional warfighting capability, and the impact of a steady shift towards options for asymmetric warfare. It draws heavily on both official open-source reporting by the United States government and the work of major research centers like the International Institute for Security Studies (IISS) and the Stockholm International Peace Research Institute (SIPRI), as well as variety of other think tanks and commercial research centers. It notes the critical role of the United States and European forces like those of Britain and France in shaping the balance, as well as the emerging role of Russia, but focuses on the detailed trends in the military spending, arms transfers, and force modernization in Iran, Iraq, and the Southern Arab Gulf states - Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE. The Forces That Shape the Gulf Arms Race Pages 22-35 The data in this report can only tell part of the story. While Iran is sometimes perceived as the military "hegemon" of the Gulf, the spending and modernization data show that many of Iran’s conventional military forces are equipped with aging, battle-worn, and mediocre weapons that make it something of a military museum. Iran has not had good access to modern weapons since the fall of the Shah, and the Arab Gulf forces are generally equipped with the most modern and effective weapons available from the U.S. and Europe and would be supported by the U.S., Britain, and France in any serious warfighting contingency. At the same time, Iran has made major advances in fielding a large mix of ballistic and cruise missiles, and asymmetric forces that can threaten shipping throughout the Gulf and in the Gulf of Oman and Red Sea. It also is expanding its military influence and presence in Lebanon, Syria, Iraq, and Yemen. Iran has also skillfully exploited a combination of asymmetric warfare, arms transfers, and support of pro-Iranian regimes and non-state actors. It has taken advantage of the self-destructive divisions within an Arab world that failed to create an effective structure of alliances, wasted much of the money it has spent on military forces and arms transfers, and is now divided by the Saudi-UAE led boycott of Qatar. 2 It has also exploited civil conflicts and divisions in Lebanon, Syria, Iraq, Bahrain, and Yemen. The fact the U.S.-led invasion of Iraq in 2003 destroyed Iraq’s capability to act as a military counterweight to Iran and that lack of any effective U.S. plan to stabilize Iraq has triggered two major rounds of fighting and divisions between its Sunnis and Shi’ites, Arabs and Kurds, regions, and tribal groupings – still leave Iraq deeply divided despite the break-up of the ISIS “caliphate.” Outside powers can only do so much to help a divided mix of Arab states and forces. U.S. and European power projection forces can add military capabilities that help guarantee an Arab victory in any serious conventional conflict with Iran, or open war with terrorists and extremists, but they cannot compensate for Arab dysfunctions, divisions, and self-inflicted wounds. Moreover, the risk of a future conflict is all too real and not simply because of the tensions between Iran and the Arab Gulf states. On July 22nd, Iran’s President Hassan Rouhani warned the U.S. that, “Mr. Trump, don’t play with the lion’s tail, this would only lead to regret. America should know that peace with Iran is the mother of all peace, and war with Iran is the mother of all wars. You are not in a position to incite the Iranian nation against Iran’s security and interests.” The next morning, President Trump replied with a Tweet in full capitals stating that, “NEVER, EVER THREATEN THE UNITED STATES AGAIN OR YOU WILL SUFFER CONSEQUENCES THE LIKES OF WHICH FEW THROUGHOUT HISTORY HAVE EVER SUFFERED BEFORE. WE ARE NO LONGER A COUNTRY THAT WILL STAND FOR YOUR DEMENTED WORDS OF VIOLENCE & DEATH. BE CAUTIOUS!” No one can safely dismiss such rhetoric as political posturing over the fact the U.S. is imposing steadily more serious economic sanctions on Iran. The history of war is as much the history of unintended conflicts and escalation as of deliberate attacks. There have already been far too many such wars in the Middle East, and the current arms race has too long and dangerous a history to ignore. Clashes with Iran in the Gulf, struggles for influence in Iraq and Syria, and the war in Yemen all act as warnings that new rounds of conflict are possible. The Iranian reactions to the U.S. withdrawal from the JCPOA nuclear agreement, the growing tensions between the Arab Gulf states, the boycott of Qatar, and the unstable outcome of the fight against ISIS and the Syrian civil war also exacerbate the potential for conflict. A. Regional Military Expenditures: IISS and SIPRI Data Pages 36-53 The trends in military expenditures form the initial core of this analysis, and there are important limits to the data. Neither the Arab states nor Iran provide anything resembling credible reporting on their military expenditures and arms transfers. This lack of transparency has helped lead to sharply conflicting estimates – or simply no estimate – of the spending of key states, sharply encouraged waste and corruption, and sharply limited regional analysis of the military balance, and the effectiveness of national forces. 3 However, an analysis of the reporting by two key think tanks – the International Institute of Strategic Studies (IISS) and the Stockholm International Peace Research Institute (SIPRI) – and IHS Janes reflects estimates that the Arab GCC states spent $95 to $128 billion on military forces in 2017. This is six-to-nine times their estimate that Iran spent $15 to $16 billion. This also reflects a consistent trend in such estimates. The Arab Gulf states have sharply outspent Iran for decades. Estimate of Gulf Military Effort in 2017 $US 2017 Millions % of GDP IISS SIPRI IHS Janes IISS SIPRI IHS Janes Iran 16,035 15,548 16,201 3.75 - 3.85 Bahrain 1,480 1,397 1,544 4.37 - 4.95 Kuwait 5,710 6,831 7,107 4.83 - 4.95 Oman 8,687 8,687 9,901 12.08 - 11.51 Qatar 6,120 - 5,676 - - 3.38 Saudi Arabia 76,678 69,413 52,098 11.30 - 7.66 UAE 30,000 - 19,760 - - - Total GCC 128,675 - 95,086 - - - Iraq 19,271 7,416 7,783 10.00 - 4.23 Total Arab 147,946 - 102,869 - - - It is likely that the true total for both the Arab GCC states and Iran was significantly higher than these think tanks report, but this would not change the relative Arab lead. Moreover, both the think tank data, and the U.S. official data in the next section of this report strongly argue that the U.S. complaints about Arab Gulf burden sharing are quantitative nonsense. 4 All the Arab Gulf states spend far more of their economies on military forces than the 2% of GDP goal set by NATO, and far less than the 3.11% the IISS estimates is spent by the U.S., the 3.10% spent by Russia, and the 1.26% spent by China Three such states – Iraq, Oman, and Saudi Arabia – spend more than 10%. While the Qatar and the UAE lack the integrity and transparency to report meaningful data on their military spending, it is likely that both obligated close to 10% or more in 2018 – driven by a surge in Qatari arms buys and the UAE's war in Yemen. These are levels of military spending that threaten the economic development and reform efforts in each such state that are critical to internal stability and fighting extremism and terrorism. B. Country Military Expenditures: U.S. State Department Data Pages 54-65 The U.S. State Department. provides a comprehensive estimate of military spending, arms transfers, and military personnel in an annual document called World Military Expenditures and Arms Transfers (WMEAT) (https://www.state.gov/t/avc/rls/rpt/wmeat/2017/index.htm). This document provides an authoritative U.S. official estimate of the key financial trends shaping military developments on a global basis and provides a range of different ways of calculating the military burden for each country. It involves a truly massive analytic effort. As a result, the latest edition was issued at the end of 2017, but only covers trends and developments through 2015.
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