What does Saudi Arabia's closer ties with Iran mean for Israel's defence industry?

Israeli defence companies may have missed out on the weapons bonanza in Saudi Arabia, following the brokering of a deal between the kingdom and Iran.

By Arie Egozi
19 March 2023
The Sky Guardian will be the first drone to be produced by Saudi Arabian Military Industries (SAMI)



After the surprising coalition created between Iran and Russia, another one was announced recently between Iran and Saudi Arabia, with the two countries restoring diplomatic ties, thanks to a deal brokered by none other than China. This surprising development will have broad repercussions throughout the Middle East and the Gulf region, as well as for the US and Israel specifically.

In recent months, Israeli Prime Minister Benjamin Netanyahu had toyed with the idea of creating an agreement with the Saudis that would make them part of the Abraham Accords.

After the signing of the Abraham Accords Israel had thought of becoming one of Saudi Arabia’s main suppliers of weapon systems. According to estimates, since the signing of the accords, Israel has sold to Gulf countries weapons and military equipment valued at more than $4 billion.

However, Saudi Arabia is investing huge sums of money in developing local production capabilities for some types of weapon systems. The kingdom plans to localise at least 50% of its defence spending by 2030 as part of the country's Vision 2030, providing a stimulus for defence companies to set up indigenous production lines.

Most of the current effort is focused on the development and production of armed UAVs and ballistic missiles. According to a report in the Alaraby news outlet, Sky Guardian will be the first drone to be produced by the Saudi Arabian Military Industries (SAMI), which signed an agreement with the kingdom's military regulator in October 2021, Al-Ekhbariya TV reported

But a former senior manager from one of Israel's largest defence companies says Israel should not miss the defence bonanza in Saudi Arabia. “The Saudis are very interested in Israeli systems,” the senior manager told Defence Procurement International, adding that Israel’s Ministry of Defence should take a positive approach and evaluate every potential deal with caution.

"I'm sure there are ways to sell Israeli-made systems to Saudi Arabia even if some of the production is performed in this country,” he says. “This opportunity should not be missed "

A high-ranking officer in the Israeli Defence Forces (IDF) who is currently involved in the Israeli defence industry, says that the Ministry of Defence should take a positive approach to the huge market created now in Saudi Arabia. "There are ways to ensure that selling defence systems and even transferring production chunks to Saudi Arabia will not harm the security of Israel.”

The Israeli Ministry of Defence declined to comment for this article, as did spokespeople for the relevant defence industries. However, the renewed relations between Iran and Saudi Arabia have changed the situation dramatically, according to Dr. Mordechai Kedar, one of Israel's leading experts in the Middle East and Gulf issue. He says Israel now faces a huge dilemma.




Kedar added that Saudi Arabia has a very weak army and has chosen the side that proves it can stand against international pressure. The attack on Saudi oil sites in 2019 was performed with Iranian-made weapon systems in the hands of the Houthi rebels in Yemen, Iran's main proxy in the region.

Maj. General (Ret.) Giora Eiland, a former head of the Israeli National Security Council, says the situation regarding selling Israeli-made weapon systems to Saudi Arabia has completely changed.

"Now I don’t see Israel approving the sale of weapons systems to a country that has relations with Iran," he says 

Sources in the Israeli defence industry agree with Eiland's assessment saying that any Israeli plans to try and grab chunks of the Saudi defence bonanza have been put on hold. According to a report on the Dutch open-source intelligence defence analysis website, Oryx, Saudi Arabia has so far primarily purchased unmanned combat air vehicles (UCAVs) from China.

Since the mid-to-late 2010s, this was reflected in the acquisition of a sizable number of Wing Loong I, Wing Loong II, and CH-4B aircraft. These added to a variety of reconnaissance UAVs produced in South Africa, Italy, and Germany that have operatiedover Yemen since the start of the Saudi Arabian-led intervention in March 2015.

In 2019, Saudi Arabia added to its arsenal of drones by purchasing the Lentatek Karayel-SU TUAV, which was developed in Turkey but would soon be produced in Saudi Arabia under the name “Haboob.”

 As part of the nation's Vision 2030, Saudi Arabia is currently developing several more UCAVs in cooperation with foreign companies and scientists. According to Israeli defence sources in the coming years, the Saudi defence industry will become a serious player in the world weapons market.

The determination of the Saudi government and the resources allocated to SAMI are gradually forming into significant projects and industrial collaborations on a scale that we have not yet seen. Saudi Arabia already possesses ballistic missiles purchased from China, including the 3,000-kilometer-range Dong Feng-3, which the kingdom displayed in 2014, and other Dong Feng-class missiles transferred from Beijing in batches since 2018.

The new missiles will likely carry conventional weapons, given that Saudi Arabia does not have nuclear weapons and is a party to the nuclear Nonproliferation Treaty.

Crown Prince Mohammed bin Salman said in March 2018 that “if Iran developed a nuclear bomb, we will follow suit as soon as possible.” There is no indication that Iran intends to produce a nuclear weapon at this time, and negotiations to restore stringent limitations to Iran’s nuclear program under the 2015 nuclear deal are continuing very slowly with little hope in the US that it will result in a new agreement.

The United States has repeatedly refused to sell ballistic missiles to Saudi Arabia, citing proliferation concerns and a commitment to remain within the Missile Technology Control Regime (MTCR), which seeks to limit the spread of ballistic missile technology.

Although not illegal, China’s assistance to Saudi Arabia contradicts its vow to abide by the MTCR. China is not a member of the export control regime but has pledged to voluntarily abide by its guidelines, which prohibit the export of missiles capable of delivering a 500-kilogram payload of more than 300 kilometres.

The Russian invasion of Ukraine has already resulted in major changes in Europe and the Middle East. Another one is starting to emerge – greater competition between the Chinese defence industry and those of the US and Israel.

The forecasted entry of China into the Gulf States brings Israel into direct competition with the Chinese in this significant defence market.

While combat-proven Israeli defence systems have created great interest in the Gulf states, Jerusalem needs formal approval from Washington for potential sales as US money has gone into the development of these systems. "By buying Chinese-made weapon systems the Gulf states push their finger into the American eye,” says Dr. Kedar, “which is one way to demonstrate their anger about US policy in their region."