Saudi Arabia exempts Western arms purchases from austerity plan: FT

Saudi Arabia is reportedly continuing to import weapons from Western countries, especially the United States, despite austerity measures taken recently to handle the kingdom's worst financial crisis in decades.

Saudi Arabia posted a $9 billion budget deficit in the first quarter of 2020 due to plummeting oil prices and the novel coronavirus (COVID-19) pandemic.

Riyadh announced last month that it will suspend the cost of living allowance for state workers and raise the value added tax threefold in a bid to boost state finances.

However, the Financial Times reported on Sunday that the kingdom's military expenditure emerged unscathed from the tough austerity measures, citing military contracts signed with American arms giants.

A Western arms industry executive based in the Persian Gulf quoted top Saudi officials as saying that there would be no military cuts.

“I was fully expecting there to be a cut, but the information from very senior levels and princes is ‘no, we’re not going to do it. In fact, don’t come and ask me if your program is going to slip, keep working hard at it, because we are just carrying ahead,’” the executive said.

“We’ve got a large number of requirements popping in through the door.”

The report cited the Pentagon's contracts worth more than $2.6 billion for the delivery of more than 1,000 air-to-surface and anti-ship missiles to Saudi Arabia.

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The US arms manufacturer Lockheed Martin, which supplies THAAD missiles to Riyadh, also told the Financial Times that it had “not seen a backing off of expenditures on defense” by any of its main Middle Eastern customers.

Robert Harward, chief executive of Lockheed’s Middle East unit, said although it was too early to judge, he expected that customers, including Saudi Arabia, “will continue with their procurement”.

“Regional threats are not receding and are more unpredictable than ever,” he said. “Countries will have to make choices on budgets, as countries always have to do.”

Another Persian Gulf-based military executive confirmed that his company had not witnessed “any shift in attitudes from the customers,” but suggested that it could still change, the FT added.

Saudi Arabia to impose austerity measures amid coronavirus crisis, oil collapse

Saudi Arabia is to suspend a cost-of-living allowance for state employees and increase value added tax (VAT).

Meanwhile, the Saudi Finance Ministry stressed that the kingdom would “continue to support our military needs."

The ministry said it had been working to rationalize spending to ensure the country got military equipment “for the right cost for the right quantity with the right specification”.

Saudi Arabia was the world’s largest weapons importer in 2015–19, according to the Stockholm International Peace Research Institute (SIPRI). The regime's imports of major arms increased by 130 percent compared with the previous five-year period.

The kingdom is stuck in a costly war on Yemen it launched in March 2015 in a bid to reinstall the former Saudi-backed regime and crush the popular Houthi Ansarullah movement.

However, over five years into the Western-sponsored war, Saudi Arabia has achieved neither of its objectives and instead plunged Yemen into what the UN says is the world's worst humanitarian crisis.

Riyadh is the largest buyer of American-made weaponry. US President Donald Trump signed an arms deal worth $110 billion with Saudi Arabia in May 2017 on his first foreign trip since becoming president.

Before his presidency, he had described the kingdom as "a milk cow" which would be slaughtered when its milk ran out.

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