Saudi Arabia signs warship construction deal with France’s Naval Group

The move is part of a larger effort aimed at weaning off the Kingdom from its oil-dependent economy and boost local manufacturing.

As part of an effort to boost domestic industry and manufacturing capabilities, Saudi Arabia signed a preliminary agreement with France’s Naval Group, to build warships in the country.

Saudi Arabian Military Industries (SAMI), the kingdom’s state defense company, made the announcement at the IDEX military conference in Abu Dhabi.

The IDEX is a show piece event for the United Arab Emirates, Saudi Arabia’s close ally.

Since 2015, Saudi Arabia, among the top 5 defense spenders in the world, has been waging a costly war in Yemen.

According to SAMI Chief Executive Andreas Schwer, this agreement includes building warships, frigates, corvettes and related items in Saudi Arabia through a majority SAMI-owned joint venture with the French firm.

“Through design, construction, and maintenance activities the joint venture will contribute significantly to further enhance the capabilities and readiness of the Royal Saudi Naval Forces,” said Schwer.

In 2017, Saudi Arabia had set up SAMI in order to develop manufacturing capabilities with the aim of producing 50% of the country’s required military equipment domestically by 2030.

This localization of Saudi Arabia’s military requirements is part of a larger effort by Saudi Crown Prince Mohammed bin Salman to diversify the country’s economy away from an oil-dependent economy.

Saudi Arabia’s staunch ally, the UAE, has also invested in developing its own manufacturing capabilities and has military and civilian contracts with several foreign companies.

However, such military deals with the Kingdom have come under scrutiny over the October killing of Washington Post columnist Jamal Khashoggi in the Saudi consulate in Istanbul. As a result, Germany has already halted arms exports to it over uncertainty surrounding the murder.

According to Ivor Ichikowitz, Paramount Group’s Chairman, this has created a “huge opportunity” for those outside of Europe, including his South African defense firm.

“I think some of them may be quite short sighted but quite honestly that is their problem and we are quite happy to be continuing,” said Ichikowitz.

Paramount has held talks with the Saudi Arabian government to establish production facilities in the kingdom.

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