2 November 2000

The tortuous Arab-Israeli peace process now seems to be entering a murky endgame that may or may not result in a comprehensive settlement for one of the world's longest-running conflicts. However, it is only one component of a region-wide equation that is changing the geopolitical landscape.

Whether peace is finally achieved or not, there has been no let-up in the region's appetite for defense spending. With American, European and Russian defense industries increasingly dependent on arms exports to maintain production lines, the Middle East remains a key sales target.

How long this will remain so is a matter of conjecture. Political, economic and social changes in the region may eventually result in a sharp downturn in defense spending. That may be some years away, as there are major realignments either under way or likely to occur that could produce a significant reduction in defense expenditure once current procurement plans are completed. Given the increasing access to ballistic and cruise missile technology, a shift in emphasis towards these weapons, and away from large standing armies, in procurement can be expected.

Iran, Israel and Turkey, the three non-Arab military powers in the region, are likely to be the most influential players. All have sizeable defense industries. Israel, the dominant military power in the region, has the most advanced, but its 1996 military alliance with Turkey will likely help Turkey expand and develop its emergent industry to a technologically advanced level. Iran, which with Russian, North Korean and other assistance, is developing a missile-manufacturing capability that is viewed in the region, and beyond, with deepening concern.

Political and economic factors, in particular the remorseless globalization process in which no state can afford to be left behind, are in play that will entail profound changes in the region over the coming decades. There are other unique factors, such as access to water amid rapid population growth, which will greatly influence events and dictate whether the transitions will be peaceful or otherwise. Turkey, which controls the Euphrates and Tigris rivers, which flow through Syria and Iraq, may find itself in a particularly powerful position in the years to come. It is already negotiating to sell water to its ally Israel and this most precious of commodities in an arid region that has undergone severe drought over the last two years could become an increasing source of friction. Syria and Iraq see Turkey's ambitious Southeast Anatolia project, known as GAP, under which 22 dams are planned on the Euphrates and the Tigris to irrigate vast tracts of land and produce hydroelectric power, as a serious threat to their water supplies. Throughout the 1990s, the dispute over the Euphrates was a key factor behind Syria's support for the Kurdish Workers' Party (PKK) and in 1998, it was only the threat of military action by Turkey (bolstered by its alliance with Israel) that forced Damascus to expel the PKK leader, Abdullah Ocalan. The next phase of the Anatolia project involves harnessing the Tigris, which is likely to exacerbate tension with Baghdad.

The political balance is changing at an accelerating rate. In less than two years, the men who have ruled for decades have passed from the scene - King Hussein of Jordan, President Hafez Assad of Syria, King Hassan II of Morocco have all died. Others are becoming old or are suffering ill-health, such as Yasser Arafat, King Fahd of Saudi Arabia and Sheikh Zayed al-Nahyan of the United Arab Emirates (UAE). Then there are those who are approaching old age with no designated successors - President Hosni Mubarak of Egypt, President Abdullah Saleh of Yemen and (again), Arafat.

The lines of succession in many pivotal states in the Middle East are becoming increasingly important issues. In Jordan and Morocco, the sons of King Hussein and King Hassan ascended to these thrones that trace their lineage and their legitimacy back to the prophet Mohammed. In Saudi Arabia, Crown Prince Abdullah has been the effective ruler since his half-brother, King Fahd, was incapacitated five years ago. However, the sons of modern Saudi Arabia's founder, King Abdul-Aziz, are all in their 70s, old men who can no longer keep succeeding each other. Eventually, age will force them to stand aside and allow Abdul-Aziz's host of grandsons to take over. That could be problematical, with the different factions within the royal family making their bid for power.

While hereditary succession in the monarchies of the region is generally accepted, this has not been the case in the largely authoritarian republics. The succession in Syria following the death of Hafez Assad in June 2000 by his inexperienced son, Bashar, has, in the eyes of many, established a dynastic precedent that is neither acceptable nor desirable to the populations of these countries. The political repercussions of this could be ominous. It seems that other republican rulers are preparing the way for their sons to succeed them, among them Mubarak in Egypt, Saleh in Yemen, Colonel Gadhafi in Libya, and Saddam Hussein in Iraq. Therein lie the seeds of internal upheaval at a time when the pressures for political reform are intensifying.

Many Arab commentators scathingly described Bashar Assad's rise to power in Damascus as a 'coronation', the emergence of a 'royal' republic, that they feared could be emulated by Arab presidents who have shown little inclination for populist reform. Such developments, at a time when access to global communications through satellite television and the internet is opening up Arab societies, long cut off from the world at large by their rulers, cannot be ignored. It can also be said that these rulers ignore them at their peril. The phenomenon of 'republican dynasties', an obsession with family power that is almost endemic in the region, has yet to become a burning public issue, largely because few dare discuss it openly in countries that are still, to one degree or another, police states. This remains a disturbing prospect, running as it does against the global trend of moving away from authoritarian regimes and towards democratic reform.

Ironically, it is Iran, largely reviled by others in the region for its Islamic fundamentalism and espousal of revolution since 1979, where parliamentary democracy in practical terms is beginning to take root. Two recent Iranian events have made a deep impression in the region. Firstly, the surprise 1997 election of the moderate cleric, Mohammad Khatami, as president, soundly defeating the candidate of the religious conservatives who have dominated politics since the 1979 revolution, and secondly his reformist supporters' victory in February 2000, winning a majority in the 270-member Majlis, or parliament. These events have underlined that the desire for change cannot be stifled indefinitely.

True, it is not yet clear whether Khatami's reformers will triumph over the well-entrenched hard-line conservatives led by Iran's Supreme Guide, Ayatollah Ali Khamenei, who control the military, much of the security apparatus and other centres of power, but the seeds have been sown. The prospect of a more moderate Iran, combining Islam with democracy and the influence this will have on the Arab world, cannot be overstated.

For the last two decades a revolutionary, fundamentalist Iran was a beacon for radical Muslims. The events of 1979 and their aftermath profoundly changed the political landscape in the Muslim Arab world.

"A radical Iran inspired radical Islamists," says Egyptian political sociologist Ibrahim Saadeddin. "A moderate Iran will inspire the moderates.... It will be good for the emerging democracies of the Arab world. It will show that even radical regimes can evolve into something more moderate and acceptable."

Under Khatami, Iran, its human and economic strength sapped by the 1980-88 Gulf War with Iraq to a degree that many have not realized, is reaching out to its former rivals in Saudi Arabia and the Gulf Co-operation Council (GCC), and others further abroad such as Egypt and Algeria. The Iranians, of course, would like to see US and Western influence in the Gulf diminished, if not terminated. But that, if it ever happens, will be a long way down the road. The Saudis, Kuwaitis and their partners still depend on US arms and protection and that is unlikely to change soon. Iran's dependence on Russia and China for technology will also continue. The greater the policy differences between Washington and Moscow and Beijing, whether this involves increasing US and Israeli influence in Central Asia or the race for Caspian energy assets, the more Iran will benefit. In the meantime, there are Iran's Shehab-series missile programs, which keep the Gulf states off balance and only fuel Israel's sense of insecurity as it transitions into new geopolitical realities. While Israel transfers its existential concerns onto Iran, or even Iraq and Libya, the equation will remain equivocal. The future relationship between Israel and the US is becoming uncertain as the foreign policy requirements of these two longtime allies, hardly bosom friends, undergoes change.

The Arab world is changing, haltingly and with considerable reluctance on the part of those who rule. The International Monetary Fund, the World Bank and donor states are demanding, if not insisting, on greater transparency and, driven by globalization, will not be denied. The rules have changed over the last decade and Arab regimes will have to comply.

Significantly, the succession of younger leaders in Jordan, Syria and Morocco over the last two years followed steps by their fathers before they died to launch initiatives toward economic and political reform. As commentator Salameh Ne'matt noted on 12 June in the leading Arabic-language daily Al-Hayat (which significantly is published not in the Middle East, but in London), that unlike their fathers, King Abdullah II of Jordan, President Bashar Assad of Syria and King Mohammed VI of Morocco "are unburdened by the heavy legacy of the past bequeathed by regional and international circumstances that no longer prevail."

He also noted: "The legitimacy of rule in the Arab world - which used to be linked to the colonial legacy, the Arab-Israeli conflict or the regional arrangements that prevailed for most of the past half-century - has changed just as the world around us has. Today, the extent of a ruler's legitimacy depends on his capacity to create a better future for his people.

"In other words, the domestic agenda has started to supersede external considerations, especially after it became apparent that Egypt's signing of a peace treaty with Israel changed nothing on the ground of reality, and that freedom and daily bread is more important to people than all the nationalistic doctrines and resounding slogans that be applied to the Arab-Israeli conflict - which continues turning in the context of a total imbalance of power in Israel's favor.

"It is striking that King Abdullah II, King Mohammed VI and Bashar Assad have all chosen political and economic reform as their hallmarks. Because they have made reform their priority, the expectations of the Jordanian, Syrian and Moroccan public are too great to make it acceptable to continue along the current path. Proclaiming the need for reform is itself a tacit admission that the status quo is no longer acceptable in the global context."

Kuwait's 50-member elected national assembly (twice suspended by the emir when it became too critical of the ruling al-Sabah family) is increasingly assertive, Qatar has held its first municipal and parliamentary elections, Jordan, Lebanon, Morocco, Yemen and Algeria have all held parliamentary polls, though not without some obvious shortcomings. While signs of political reform, heralding wider freedoms and more transparent governance, are growing, the Arab world is still far from democratic. Grafting on Western-style democracy may not be the best course, but the wheel is in motion and as it turns could unleash turbulence as the region adjusts to a new era.

Full-blown inter-state conflicts are unlikely in the near-term, but civil strife could well erupt in several states, such as Iraq and Libya. Algeria is still gripped by conflict between the military-backed government and Islamic fundamentalists. However, since the election of President Abdelaziz Bouteflika in April 1999 the intensity of the barbaric bloodletting has diminished, partly because the region's fundamentalists have found that violence has eroded their support. Further Algeria-style eruptions, fired by fundamentalism, are unlikely.

Even Saudi Arabia has not escaped the ravages of low oil prices. The 1990-91 Gulf War cost it US$60 billion at a time when oil prices were poor. Catching up, while having to deal with the unprecedented problem of budget deficits, has been difficult; to the point that Crown Prince Abdullah told the GCC that the old days of abundance were gone forever. That was a seminal declaration and everyone took note. Saudi Arabia's rulers, faced with internal dissent stemming from the presence of US and Allied troops on its soil and that of its partners, have found themselves under unprecedented pressure to become accountable. Bombings in Riyadh and Dhahran in 1995 and 1996, killing American military personnel, brought into sharp focus the regime's potential for instability. The response was the creation of an 18-man Royal Family Council (RFC) in mid-2000 to scrutinize the behavior of the 2,000-3,000 princes who all have a say in the affairs of the Al-Saud family, and who all take their slice of the pie.

It may not be democracy in action, but it was an unprecedented step towards reform and to address growing internal pressures that question the authority of the Al-Saud and its extravagant lifestyle. The royal family, with its monopoly of political and economic power, is facing a critical period, with strains emerging over the succession, which is traditionally decided on a consensual basis, and the pace of change that increasingly seems inevitable.

In the long term, it is likely that political changes and the growing concept of rapprochement between states in the region, Arab-Israeli peace process or no, are the harbingers of a new era; one in which the military requirements of the key players will diminish in favor of meeting the needs of peoples who have long been ignored, repressed or simply bought off. However, that is not likely to happen in the immediate future. Military forces in Arab states are as much a pillar of regime survival as a counter to external threats, and slashing defense budgets and the benefits that the officer corps enjoy, could be dangerous. Far too many uncertainties remain, for rulers and ruled alike. In this context, the region remains a major arms buyer. Below are some of the procurement requirements of the key players.

ISRAEL

Israel remains the dominant military power in the region, with weapons programs that range from new tanks to a multilayered missile-defense shield that includes the Arrow-2 anti-tactical ballistic missile (ATBM), which is beginning operational deployment, and the Ofeq spy satellite series. Despite growing fears about military budget cuts (offset to some degree by promises of hefty US military aid for withdrawing from South Lebanon in May 2000 and in expectation of signing peace agreements with Syria and the Palestinians), the Israel Defence Forces (IDF) are undergoing their most comprehensive restructuring since the state was founded in 1948. This includes radical adjustments in doctrine and operational procedures amid an evolving strategic environment in which the perceived threats are changing dramatically.

Among the most important decisions that have been made is the creation of a strategic command to deal with the long-range threats from states such as Iran and Iraq. According to Gal Luft, an IDF reserve lieutenant colonel and a research associate at the Washington Institute: "The IDF hopes that the combination of various elements in Israel's force structure - ballistic missiles, long-range strike fighters, submarines (perhaps equipped with cruise missiles), and missile defenses - in a single strategic command, would allow these assets to be employed more effectively, result in a more coherent strategic doctrine and enhance Israel's deterrent and second-strike capabilities."

The air force is looking for 60-80 more F16s or F-15Is, and is considering future acquisition of F-22 Raptors, for its first-line component. It also has a requirement for more AWACS and upgraded intelligence systems. The government plans - budgets permitting - to spend more than US$3 billion on fixed- and rotary-wing aircraft over the next five years, with an additional 24 AH-64 Apache Longbow attack helicopters for two squadrons worth some US$860 million, V-22 tilt-rotor aircraft and C-130J transports, all funded by US military aid, to expand and upgrade the IDF's rapid-mobility capabilities. More advanced long-range unmanned aerial vehicles (UAVs), an Israeli speciality, are being considered.

Discussions with Lockheed Martin Aeronautics for the purchase of up to 22 new transport aircraft are under way. However, it is believed that the program, which could involve 12 C-130Js and 10 C-37Js worth up to US$1 billion, could be hampered by a lack of funds unless the US provides substantial military aid to compensate for any final peace settlement with the Arabs.

The IDF is also due to overhaul its main battle tank (MBT) force. With the Merkava-4 program reportedly threatened by planned defense budget cuts there has been talk of acquiring US M1A2s by 2002. Israel has not bought MBTs from the US since the M60 in 1985.

SAUDI ARABIA

The Saudis have been pondering a replacement for their aging Northrop F-5s for more than a decade. This program resurfaced seriously in 1997 with a requirement for 80-100 advanced fighters. The F-16 was seen as the frontrunner and there have been discussions with the US on this, but Saudi and US officials have also indicated that 20-24 F-15s may also be acquired, possibly as a mixed package with F-16s.

There is a requirement for at least 300-400 more MBTs worth around US$7 billion for the army, with the Abrams, Challenger 2 and Leclerc in the running. This program has been repeatedly delayed over recent years because of financial restraints caused by poor oil prices. The Saudi National Guard has requested 132 light armored vehicles from Diesel Division of General Motors of Ontario, Canada, 1,827 TOW2A anti-tank missiles, and advanced communications equipment from Raytheon as part of a US$416 million package.

Other requirements presented to Washington include a US$1.6 billion three-year contract package for flight simulators, parts, and technical services for F-15s, as well as maintenance, training, and modification facilities for F-15s. The prime contractor under this US$690 million program would be Al-Salam Aircraft Company, 50% owned by Boeing, the F-15's manufacturer.

The air force also has a requirement for up to 70 transport aircraft, possibly the C-130J-30, to expand its transport fleet and replace the 40 C-130E/Hs. Additional KC130 aerial-refueling tankers are also required.

US Defense Secretary, William Cohen, announced in March 1999 that the Clinton administration had agreed to sell the Saudis 64 AIM-120B AMRAAMs and associated hardware and support for its F-15E Eagles at a cost of US$28 million.

The Saudis would like to upgrade their AEW capability, acquiring more Boeing E-3 AWACs. AEW has become increasingly important in the GCC states since the 1990-91 Gulf War to improve the efficiency of their fighter assets. Only Israel, Egypt and Saudi Arabia operate AEW aircraft at present. The smaller GCC states do not need platforms like the E-3, but they have shown interest in smaller aircraft such as the Grumman Hawkeye, the Fokker Kingbird, CASA's CN-235 and the Beech King Air.

UAE

The UAE is currently midway through a 10-year arms-procurement program, under which it has plans to acquire equipment worth US$15 billion by 2005. The pace of modernization has slowed somewhat after heavy spending and low oil prices during the 1990s. The air force - which like the other armed forces in the seven-member federation are dominated and funded by Abu Dhabi and Dubai, the richest of the emirates - has also embarked on a wide-ranging airfield and infrastructure program to accommodate its new aircraft purchases and the expansion of capabilities and missions.

The navy, whose share of this program is around US$2 billion, has plans to acquire advanced missile frigates, although in 1999 it withdrew interest in buying two Type-22 frigates from the UK's Defence Export Services Organisation, apparently because of a shortage of personnel to operate the 148m vessels, each carrying a crew of 270. The acquisition of two Royal Netherlands Navy Kortenaer-class frigates in 1997 was seen as an interim step towards acquiring the expertise for more advanced vessels. The first phase of the LEWA III program for 12 fast attack craft was expected to get under way during the 2000-2005 budget plan. Other major naval programs include: LIWA 1 for six to eight ocean-capable patrol vessels valued at more than US$1 billion; LIWA 2 for six to eight corvettes worth US$1 billion; and LIWA 4 for six mine countermeasures vessels. Much of the work for these programs is expected to carried out by Abu Dhabi Ship Building (ADSB), a joint venture between the government and Newport News Shipbuilding of Virginia set up in 1995. It is currently handling the US$150 million 15-month refit for the navy's six German-built Luerssen Werft TNC-45 patrol boats with upgraded radars and command and control systems. This is scheduled for completion by the end of 2000.

The air force has a requirement for more training aircraft to support the introduction of more than 140 Mirage 2000-9 and F-16C/D Block 60 combat aircraft over the next few years. The UAE is expected to upgrade its 20 BAE Systems Hawk Mk63 and 18 Hawk Mk102 trainers to a common standard as well as acquire new aircraft. Germany has offered to share development of an advanced trainer/light combat aircraft (LCA) with the UAE, focussing on the AT-2000 Mako, which could enter production in 2007 and be operational by 2010. Seeking to break into the lucrative Gulf market, the German sales push included an October 1999 offer of 30 ex-Luftwaffe Alpha Jets, a move that could thwart further Hawk sales.

The UAE has selected Indonesia's Industri Pesawat Terbang Nusantara (IPTN) to provide four CN-235-200 maritime patrol aircraft (it already operates seven CN-235M tactical aircraft), but has not yet signed the US$150 million contract for the MAPs which are required to have anti-submarine as well as anti-surface vessel capabilities. As with MCM, anti-ASW remains an area of weakness in the UAE's naval capabilities. Whether correcting these deficiencies is still a high priority because of the warming relations between the GCC states and Iran is not clear. However, the UAE is still at odds with Tehran over Iran's occupation of the strategic southern Gulf islands of Abu Musa and the Greater and Lesser Tunbs and this could well provide the impetus for acquiring these capabilities.

In March 2000, the UAE signed a long-delayed, and hotly contested, US$6.4 billion contract with Lockheed for 80 Block 60 F-16s, with deliveries scheduled to start in late 2004 and end in 2007. General Electric Co won a US$400 million contract to supply an upgraded version of the F110-GE-129 jet engine, plus spares, for the F-16s. The UAE has also been cleared to receive 491 AIM-120B AMRAAMS, 267 AIM-9Ms, 163 AGM-88 HARMs, 1,163 AGM-65D/G Mavericks and 52 AGM-84 Harpoons under the F-16 deal.

The F-16 sale to the UAE, which has bought French combat aircraft almost exclusively in the past, will help standardize the front-line air components of the GCC states, making integration with US air forces easier in the event of further large-scale hostilities in the region.

The UAE is also expected to receive the Black Shahine Matra/BAe stealthy Apache cruise missile despite US objections that this contravenes the MTCR.

BAHRAIN

The US has revived, and is close to finalizing, a controversial deal to sell 25 Block 1 Army Tactical Missile Systems (ATACMS) worth US$40 million. This version has range of 165km and uses 950 M74 bomblets, primarily for use against high-value targets such as fixed missiles sites and armor concentrations. The sale had been held up by the US because of concerns it would violate the Missile Technology Control Regime (MTCR). ATACMS, built by Lockheed Martin Vought Systems of Dallas, have never been sold to the Middle East before.

In 1999, the US agreed to sell Bahrain 26 AIM-120B Advanced Medium-Range Air-to-Air Missiles (AMRAAMs) produced by Hughes and Raytheon. The US$110 million package includes 50 missile launch rails for Bahrain's F-16s, missile containers, software, maintenance and pilot training.

Bahrain is expected to re-examine its procurement priorities after 2000 once acquisition of the 10-12 F-16C/D aircraft has been completed. Bahrain's eight F-16Cs and four F-16Ds will be retrofitted to carry AMRAAMS.

There will be increased focus on countering WMD, such as Iran's Shehab-3 ballistic missile, with the air-defense system, currently comprising one I-Hawk battery and Crotale systems, due to be upgraded and expanded.

The navy, which recently acquired a surplus 3,600-tonne ex-USN Perry-class frigate (the Jack Williams, renamed Sabha) armed with Standard AD systems and Phalanx short-range defense systems, is looking towards anti-submarine warfare and mine countermeasures capabilities, as well as naval helicopters.

QATAR

Planned procurements for land forces include up to 50 MBTS to replace the army's 34 AMX-30s. The Leclerc, Challenger 2 and M1A2 are in contention. France, which supplies some 70% of the emirate's military needs, provided 10 Leclercs "as a gift to cement the long friendship between our two countries" in October 1998 and signed an expanded bilateral defense agreement with Qatar as well.

Qatar is expected to seek up to 75 additional armored personnel carriers (APCs) and is understood to have a requirement for 25 tank transporters.

Other requirements are a joint surveillance aircraft program with Saudi Arabia - although Qatar's independent policies have put it at odds with the rest of the Saudi-dominated GCC and makes such joint projects problematic - and an US$800 million upgrade for the Special Security Forces. The navy has a requirement for three 85-meter corvettes.

Qatar is understood to be planning to acquire French PGMs and ASMs in addition to the French Mica AAMs it is now receiving. Matra/BAe Dynamics has offered an export version of its air-launched APACHE stealthy standoff missile known as Black Pearl.

OMAN

The sultanate's current five-year defense plan expires at the end of 2000 and low oil prices during the last few years have forced postponements. It is believed that the 2001-05 plan will include the acquisition of 30 helicopters (the Cougar, EH-101 and Black Hawk are frontrunners), new training aircraft and three C-130 transports and I-Hawk AD missiles. The increase in oil prices since early 1999 will likely mean that shelved procurement programs can be revived. These include a new radar and communications network.

The final batch of 10 Challenger 2 MBTs, first ordered in 1993, was scheduled to have been completed by October 2000 to equip the 1st MBT Regiment. This will complete a two-stage order for 38 Challenger 2s, plus four recovery vehicles, two training vehicles, four Alvis Stormer command vehicles and nine Unipower M series transporters.

The Royal Omani Air Force is acquiring Martello S743D D-Band long-range, air-defense radars under a modernization program, which includes an continuing US$64.4 million upgrade for its 20 Jaguar OS/OB ground-attack fighters to UK Royal Air Force standard scheduled for completion by the end of 2000. That will extend their operational life for 10 years. Oman is not expected to start looking for a replacement for the Jaguar force until 2005. Future acquisitions are expected to include 30 helicopters, three more C-130 transports and Hawk AD systems.

KUWAIT

The emirate has largely rebuilt its armed forces, which were shattered in Iraq's August 1990 invasion. Kuwait began negotiations with Lockheed Martin in December 1999 for the sale of four C-130J-30 transport aircraft to replace its civilian-standard L-100-30 Hercules (the design is seen as a possible precursor for up to 70 of the aircraft for Saudi Arabia.) A requirement for 48 self-propelled guns worth some US$436 million remains open because Kuwait's increasingly aggressive parliament has blocked the sale of US M109A6 Paladin, claiming that China had offered its PLZ-45 at a better price.

SYRIA

The armed forces have not purchased any new combat aircraft since the mid-1980s, the navy is rapidly becoming obsolete and the land forces are bereft of any advanced systems. Israel continues to view Syria's ballistic missile arsenal, which are considered capable of carrying chemical warheads, as a serious threat.

The Syrians, whose acquisitions essentially halted with the collapse of the Soviet Union, are in dire need of modern weapons systems and intelligence-gathering systems, but are constrained by economic problems that are not likely to be resolved for many years, if at all. US and Israeli pressure has blocked several Syrian attempts to acquire new equipment, such as thermal-imaging units from South Africa for its antiquated armored forces. A US$10-12 billion military debt owed to Russia, inherited from the former Soviet Union, remains a serious obstacle to reviving arms supplies from Moscow, although negotiations continue despite strong US and Israeli objections.

IRAN

The Islamic republic has been concentrating on its ballistic missile program, the Shehab-3 system, with a range of 1,300km, and reportedly a more advanced model, the Shehab-4. These will be able to hit targets anywhere in the Gulf, Israel and eventually Southern Europe. Financial constraints and international arms embargoes have blocked a major effort at modernization, a laborious process that has been under way since the end of the 1980-88 Gulf War with Iraq, which seriously sapped Iranian military strength and inventory. Russia and North Korea have helped the Iranian missile program, but US pressure has taken its toll.

EGYPT

Egypt, aided by some US$1.3 billion a year in US military aid that began with the 1979 Camp David peace treaty with Israel, is midway through a conversion from Soviet-era equipment and doctrine to a Western model. Full transition is expected by 2005. In the latest upgrade, the US will supply a ground-launched, short-range version of the AIM-120 AMRAAM to replace its aging Soviet-built SK12 (NATO designation SA-6 'Gainful') surface-to-air missiles.

The US is pressing Egypt to acquire PAC-3 (Patriot Advanced-Capability) systems, thus extending that system through the belt of US allies in the region and bolstering inter-operability. However, the Egyptians have delayed this purchase from 2004 to 2006 because of financial problems. Israeli concerns at the improvement in Egypt's combat capabilities has caused some problems and are likely to continue to do so in terms of what the US is prepared to offer. Cairo has in turn voiced concern about Israel's military alliance with Turkey.

Egypt is now acquiring the M1A1 MBT, producing it themselves under license at a rate of about 10 a month, to develop a main armor force, with its 700 M-60A1 MBTs undergoing upgrades to A3 standard.

In 1999, Egypt signed a follow-on foreign military sales contract worth some US$1 billion for a sixth batch of 24 F-16C/D Block 40 aircraft, raising its total order to 196 since 1982. It has sought to acquire 12 Boeing F-15s, but that is not likely to be approved, largely because of Israeli objections and because it would signal a "strategic shift in air policy."

Egypt has requested six land-based radar systems from the US to bolster its air defenses. The Pentagon announced in July 2000 that it plans to sell Egypt military equipment and support services worth US$882 million to upgrade its air defense system. The air force's six E-2C Hawkeye AEW&C aircraft are to be modernized to Hawkeye 2000 standard under a US$138 million FMS contract with the US Navy, the first of which is scheduled for delivery in October 2001.

TURKEY

Turkey, the only NATO member to boost defense spending since the Cold War ended, is pressing ahead with a US$70-80 billion procurement program over the next 25 years. This is part of an ambitious military modernization plan that is focused on building up an indigenous defense industry through technology transfer, primarily from the US, to reduce reliance on foreign suppliers. Originally envisaged as a US$150 billion program, it was effectively halved because of financial constraints, which are also hampering procurement plans.

One of the major projects is a US$7 billion third-generation MBT co-production program for 1,000 MBTs by 2013 (reduced from the original target of 3,000) with the armor entering service by 2004, along with plans for upgrading the army's 630 M60A3s and 274 M60A1s. Israel Military Industries (IMI) is reported to be in line for an initial contract to upgrade 170 M60A3s by 2003 while Ankara starts retiring its 1,300-strong M48A5T1 fleet.

Another key project is a requirement for 145 attack helicopters, which Ankara hopes will lead to an indigenous helicopter-manufacturing capability. The project has been hit by repeated delays, but the target date for first deliveries is still 2002. Frontrunners in the US$4 billion program are Italy's Agusta A129, Bell Helicopter-Textron's AH-1Z King Cobra and the Kamov Ka-50/52 in collaboration with Israel's IAI.

Ankara has confirmed its requirement for eight airborne early warning and control (AEW&C) aircraft by 2008, with the Boeing 737 with a Northrop Grumman radar system and the Airbus A310 with a Raytheon-Elta radar shortlisted. Israel Aircraft Industries is pushing its Phalcon, a converted Il-76 platform. Turkey is also interested in acquiring intelligence satellites - possibly with Israeli assistance - and new radar systems, with Alcatel of France and Israel Aircraft Industries in the running.

LIBYA

The operational capabilities of the armed forces have seriously deteriorated since the end of the Cold War and during seven years of limited UN sanctions. These sanctions were imposed in April 1993 after Tripoli refused to hand over two intelligence service operatives who had been indicted by US and UK authorities for the December 1988 bombing of a Pan American Boeing 747 over Lockerbie, Scotland, in which 270 people died. The sanctions were suspended - but have not yet been lifted - in April 1999 after Colonel Gadhafi handed over the suspects for trial under Scottish law in the Netherlands under an agreement brokered by UN Secretary-General Kofi Annan.

The Libyan forces are in dire need of upgrades across the board. Moscow, which was Libya's main arms supplier before the Soviet collapse, has said it is prepared to provide Gadhafi with a wide range of new equipment, which Tripoli is now likely to be able to afford due to the recent sharp rise in oil prices.

Turkey's proposed dam project in the 1990s threatened the destruction of many Kurdish towns and villages like this in the Tigris Valley, Turkey. Access to water is a potential cause for conflict. Syria and Iraq, for example, see Turkey's current Southeast Anatolia project, under which 22 dams are planned on the Euphrates and the Tigris to irrigate vast tracts of land and produce hydroelectric power, as a serious threat to their water supplies. (Source: EPA/PA News)

The Arrow-2 ballistic missile makes Israel the most militarily dominant country in the region. (Source: EPA/PA News)

Iranian President Mohammad Khatami's reformers may triumph over the well-entrenched, hard-line conservatives to produce a more moderate Iran combining Islam with democracy. (Source: EPA/PA News)

Bashar Assad of Syria and his contemporaries have chosen political and economic reform as their hallmark. (Source: EPA/PA News)

Rulers like Crown Prince Abdullah of Saudi Arabia recognize that the days of abundance based on high oil prices are over and that moves to greater accountability are being demanded. (Source: EPA/PA News)

The Israeli Defence Forces is hoping to update equipment like its Merkava main battle tank fleet. (Source: IDF)

The acquisition in 1997 of two Kortenaer-class frigates is part of the UAE's 10-year procurement program. (Source: John Brodie)

Bahrain Air Force F-16s are being updated to carry AIM-120B Advanced Medium-Range Air-to-Air Missiles (AMRAAMs) produced by Hughes and Raytheon. (Source: Lockheed Martin)

Iran's ballistic missile Shehab-3 ballistic missile series is viewed with deepening concern in the region. The system has a range of 1,300km. (Source: EPA/PA News)

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SECURITY
Iran plans military expansion

Murky moves in Ukraine

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DEFENCE
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Taiwan test-fires AA missiles

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BUSINESS
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