Saudi Arabia state defense company seeks wide-ranging deals with South African arms firms

A member of the South African Defence Force holds a MK1S grenade launcher manufactured by Milkor, a South African manufacturer, during the Africa Aerospace and Defence Expo on September 20, 2018, at the Waterkloof Air Force base, on the outskirts of Pretoria. (AFP)
Updated 04 October 2018
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Saudi Arabia state defense company seeks wide-ranging deals with South African arms firms

  • Saudi Arabian Military Industries’ (SAMI) chief executive Andreas Schwer said he expected to conclude the first partnership deals by the end of the year
  • Saudi Arabia is the world’s third largest defense spender behind the United States and China with an estimated military budget last year of nearly $70 billion

JOHANNESBURG: Saudi Arabia is in talks with South Africa’s major arms manufacturers and is considering taking an equity stake in the struggling state-owned defense firm Denel, the head of the Saudi state defense company has told Reuters.
Saudi Arabian Military Industries’ (SAMI) chief executive Andreas Schwer said he expected to conclude the first partnership deals with South African companies by the end of the year, though he would not identify those initial partners.
South Africa’s Department of Public Enterprises, which oversees Denel, acknowledged the talks with SAMI but said it was too early to give details of any potential partnership arrangement.
The Paramount Group, a privately held South African company, has already said it is in talks with Saudi authorities.
“To make it clear, we are in discussions with all major South African companies, not only Paramount, not only Denel,” Schwer said in a telephone interview on Wednesday.
South Africa’s defense industry once played a major role in the country’s economy, but more recently it has suffered from the impact of a squeeze on defense spending globally and a weak home market.
Saudi Arabia is the world’s third largest defense spender behind the United States and China with an estimated military budget last year of nearly $70 billion.
Since 2015, the Kingdom and its regional allies have been fighting a war against the armed Houthi movement in Yemen in support of the internationally recognized government there.
With little local manufacturing capacity, however, it has long been forced to import the bulk of its military hardware.
The Saudi government is now seeking to develop its own domestic defense industry with the goal of localising half of its military spending by 2030. Schwer said SAMI aimed to have all its foreign partnerships in place by the end of next year.
“We are in discussions with the South African government in order to identify opportunities to set up strategic partnerships which could include an equity investment from our side into Denel. It’s not decided yet, but it’s one option,” Schwer said.

STRUGGLING INDUSTRY
Over 60 percent of Denel’s revenues come from exports. But the company has been grappling with a liquidity crunch after becoming embroiled in corruption scandals during the presidency of Jacob Zuma.
“We hope to get access to their technology. They have to commit to transfer their technology to Saudi Arabia and to build up together with us local capabilities, not only manufacturing but also engineering,” Schwer said.
He said those same conditions would apply to all of SAMI’s partners, and in return Saudi Arabia would offer preferred or exclusive market access to companies.
Denel did not pay senior staff their salaries in full this month. Labour unions say it is critical that Denel receives financial support — either via additional government guarantees or a capital injection.
A Denel spokeswoman said she was not aware of the discussions with SAMI and the Saudi government.
“Denel would welcome any country that looks at South Africa for procurement of defense material,” the spokeswoman Vuyelwa Qinga, wrote in an emailed response to Reuters’ questions.
President Cyril Ramaphosa visited Saudi Arabia in July and subsequently announced that the Saudi government pledged to invest at least $10 billion in South Africa.
Department of Public Enterprises spokesman Adrian Lackay said there had been discussions between SAMI and various state bodies about Saudi Arabia’s interest in defense technology.
“But at this stage it would be premature and speculative for the DPE to attempt to provide details of any specific transactions,” he said.
A United Nations arms embargo imposed on South Africa’s apartheid government in 1977 forced the country to produce all its own military hardware.
By 1994 when Nelson Mandela was elected president, the industry employed over 100,000 people. But defense spending has steadily declined and just 15,000 work in the sector today, a trade association official said earlier this year.
“In the beginning, we will pump in lots of additional capacity into South Africa to expand the capabilities and capacities in order to serve our needs and, yes, progressively we will build up capabilities here in the kingdom,” Schwer said.
He said even though the Saudis were pursuing the partnership to build their own domestic industry, the end result for South Africa would be a much bigger defense industry.


Saudi Arabia’s King Salman says Kingdom is committed to serving Muslims

Updated 1 min 1 sec ago
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Saudi Arabia’s King Salman says Kingdom is committed to serving Muslims

  • Prince Khaled Al-Faisal gave a speech during the opening on the World Conference on Islamic Unity
  • Prince Khaled welcomed the participants at the conference and has delivered to them the greeting of the king

MAKKAH: Rejecting all forms of hatred and extremism, Muslim scholars from 127 countries have proposed to initiate an intercultural partnership to effectively fight Islamophobia.

More than 1,299 religious scholars and intellectuals took part in a conference titled “International Conference on Islamic unity — the perils of labeling and exclusion” held in Makkah on Wednesday.

Makkah Gov. Prince Khaled Al-Faisal inaugurated the event organized by the Muslim World League (MWL). 

The participants of the conference called for a comprehensive plan to address sectarianism and extremism.

They also stressed the need for creating effective channels of communication between followers of different Islamic schools of thought to remove misunderstandings and increase cooperation.

They unanimously rejected sectarian views and extremist ideas and urged scholars and preachers to play their role in uniting Muslims.

The Makkah governor delivered a speech on behalf of King Salman underlining the need to remove misconceptions about Islam and Muslims through dialogue. He also urged Muslims to set aside their petty differences and to work together to achieve a great and prosperous future.

Saudi Arabia’s Grand Mufti Sheikh Abdul Aziz Al-Asheikh, who is also head of the MWL Supreme Council, highlighted the teachings of Islam that categorically reject all forms of discrimination. 

The grand mufti urged the Muslims to forge unity among their ranks and do away with rivalries, petty differences and say no to divisions and factionalism. 

Sheikh Abdallah bin Bayyah, president of the Emirates Fatwa Council, stressed that unity is a great Islamic concept that includes all spheres of human existence and covers all individual, collective and international relations. Islam is a religion of unity, he added

Sheikh Bayyah said the difference of opinion should not be construed as enmity. 

He deplored the spirit of exclusion and rejecting and mistrusting others. He said a moderate approach is necessary to counter extremism and hatred. 

MWL Secretary-General Sheikh Dr. Mohammed bin Abdulkarim Al-Issa said the problems we are witnessing in today’s world emanate from a lack of open dialogue and futile rivalries between sects and denominations.

The secretary-general of the Organization of Islamic Cooperation (OIC), Dr. Yousef Al-Othaimeen, hailed Saudi Arabia’s successful experience against extremism, violence and terrorism. He said the steps Saudi Arabia has taken to counter this negative trend have transformed it into a reliable reference for everything related to Islam. 

He praised the efforts, bold steps and resolute policies carried out by the Kingdom to eradicate extremist ideas from society.