x Abu Dhabi, UAEFriday 28 July 2017

BAE targets alliance with Emirates

BAE Systems seeks to become a key ally for the UAE in its plan to build a new industrial economy based on high-end technology.

Simon Keith, the managing director of BAE Systems in the Middle East, Africa and Asia Pacific, says the company is looking for partnerships outside its core markets in the US and the UK.
Simon Keith, the managing director of BAE Systems in the Middle East, Africa and Asia Pacific, says the company is looking for partnerships outside its core markets in the US and the UK.

BAE Systems, the world's second-largest defence company, is seeking to become a key ally for the UAE in its plan to build a new industrial economy based on high-end technology. Abu Dhabi is focusing on technologies such as making composite aircraft parts and semi-conductors as it attempts to leapfrog the traditional development cycle into capital-intensive, high-value industries.

BAE plans to pursue joint ventures on its land-based and seaborne systems in the Emirates and said it was willing to transfer certain technologies as part of the deal. "One of the things we are doing now is looking for partnerships, and this is particularly true in the Middle East," said Simon Keith, the managing director of Middle East, Africa and Asia Pacific for BAE Systems, who moved his offices from London to Abu Dhabi this month.

The company has a joint venture with Abu Dhabi Ship Building to provide naval support in the Gulf, and has held discussions for joint ventures with Al Taif Technical Services of Abu Dhabi, which is owned by Mubadala Development and maintains and repairs UAE Army vehicles. The actions are part of a wider trend as BAE looks at partnerships as a way to develop local footprints outside of its core markets in the US and UK.

It now counts seven countries as "home markets", including India and Saudi Arabia, where it has 5,000 employees. It also counts Oman as a major and long-standing customer. But while it has sold products and services to many Middle Eastern and North African nations, BAE has had more modest success in the past two decades with some Gulf countries. Defence analysts attribute this to the lingering stigma of a corruption scandal beginning in the 1980s, which surrounded the sale of fighter jets to Saudi Arabia.

"No one wanted to deal with them, more or less," said Dr Theodore Karasik, the director of research and development at the Dubai-based Institute for Near East and Gulf Military Analysis. "There were still deals but not at the level they were at earlier. This seems to have passed, however." Mr Keith acknowledged there were some low-profile years for BAE in the UAE in the 1990s, but said it was a case of a mismatch in what the Emirates needed and what his company could provide.

"At the time, probably we didn't have what the UAE was looking for," he said. Its largest deals in the UAE took place in the 1980s, when it signed contracts for 38 Hawk training jets and light attack aircraft to the UAE's Air Force and Air Defence. Those aircraft are still in operation. More recently, BAE has found success in land-based systems, which it has been building its expertise in for the past decade, including armoured personnel carriers, mine-resistant vehicles and tanks.

BAE has sold about 20 armoured personnel vehicles to Dubai's elite security units, including some being delivered this month, as well as more than 70 mine-resistant armoured personnel carriers to the UAE Armed Forces in Abu Dhabi. The company is keen to put distance between itself and the police investigation into a £43bn (Dh244.4bn) contract signed in 1985 to supply more than 100 fighter jets to Saudi Arabia that resulted in the company agreeing to pay damages of £286 million to the US and UK earlier this month.

Mr Keith said BAE could finally focus its energies on the future. "It's a line drawn under the past. We can now look forward, instead of looking back." Dr Karasik, meanwhile, said only time would tell how easily the company could shrug off the scandal. "It was so large; it went on for so long and involved some key personalities. We are going to have to wait and see what happens." igale@thenational.ae