Until the 1990s the United Arab Emirates’ (UAE) national security policy was traditionally conservative, focused primarily on state survival and territorial unity. However the invasion of Kuwait forced the UAE to reassess its vulnerabilities as a small state. Under the leadership of Mohamed bin Zayed (MBZ), the son of Sheikh Zayed, the UAE has revamped its national security policy to one of ambition. Emirati national security policy was shifted to focus on self-sufficiency, economic diversification, containing threats such as the Axis of Resistance & Islamism, projecting regional influence and ensuring good relations with global powers by having them have a stake in Emirati security. However the last point has failed to fully guarantee the UAE's security, prompting a need for greater independence in defense.
A new critical pillar of the UAE’s national security strategy centres around its creation of an indigenous military industrial complex (MIC). Anticipated to exceed $129 billion in cumulative defence investment within 3 years, this commitment underscores the UAE’s shift in strategic priorities in a quickly changing Gulf. Factors driving this transformation include the diminishing role of the U.S. as the Gulf’s security guarantor post-Arab Spring, the pivot away from hydrocarbons, and the rising threat of Iranian militias.
Whilst the UAE has a long history of purchasing arms from larger powers, this trend has now begun to shift, with Emirati defence strategy now looking to create its own vertical domestic defence industry, including R&D, production and maintenance. By creating its own domestic military industrial complex (MIC), the UAE seeks to enhance resilience and safeguard its autonomy whilst bolstering its capacity projecting regional influence.
To achieve this, the UAE employs a variety of diverse strategies, from strategically hedging itself between the US, Russia and China, to securing its long-term knowledge capital via its upcoming academic sector. The UAE has begun to rapidly develop its newest domestic industry – defence. This article examines how the creation of an indigenous MIC is critical for its national security strategy by reducing the UAE’s and explores the key methods to facilitate this shift.
Why does the UAE want an Indigenous Defence sector?
Strategic Autonomy
The UAE is a small state. It has a population of 9.4 million and is only abundant in one resource - hydrocarbons. For decades, the UAE has relied on foreign suppliers and guarantors for its defence needs, including the US, UK and Russia. These relationships succeeded in providing the UAE with advanced weaponry, tech and training, however they have also exposed vulnerabilities. The return of inter-state conflicts, a weakening dollar and trade restrictions could jeopardise the flow of these goods during crises. For example, in 2019 the US Congress attempted to block arms sales to the UAE due to Emirati involvement in the Saudi-led coalition's war in Yemen, which has been widely criticized for its humanitarian toll. The Yemen War, often described as a proxy conflict between Saudi Arabia and Iran, saw the UAE playing a leading role in counterinsurgency operations, including combating the Iran-aligned Houthi militia. Emirati forces, using advanced U.S. weaponry, conducted precision strikes and operated on the ground alongside local Yemeni militias (STC), securing strategic locations such as Aden and key ports like Mukalla. However, this reliance on U.S.-supplied weapons highlighted the fragility of the UAE’s security framework when geopolitical pressures mounted against its actions.
The attempted US arms served as a rude awakening to Emirati leadership.It reinforced the notion that 1) the US would no longer guarantee the security of the UAE, nor the Gulf as a whole and 2) that dependence on a single or limited number of suppliers for defense needs posed significant risks to national autonomy. The proposed embargoes also were emblematic of the general decline of the “special relationship” between the Gulf states and Western powers as a whole, a relationship that was categorised by its colonial legacy (specifically Britain and its founding of the Trucial States) and economic interdependence. British influence during the colonial era, and later U.S. foreign investment, particularly in the UAE’s oil and gas sectors, created a dynamic where Gulf states relied on Western powers not only for economic development but also for military protection. As a result of the Yemen situation, the UAE had realised that it needed to recalibrate its military dependence strategy to one that would grant it greater autonomy - specifically by diversifying its defence production. Ultimately mitigating the risks of foreign political leverage.
Economic Resilience
The UAE is an exceptionally wealthy small state, with a GDP of $568 billion, however it has an extremely narrow resource pool, unrefined hydrocarbons. As such, any impact to the non-renewable energy market would be immediately felt in the UAE. The future of oil demand is uncertain, the domestic defence sector would diversify the UAE’s exports, highly relevant to the higher rate of conflicts currently. This would provide a new area for sustainable growth, and high-skill employment for Emiratis in R&D, manufacturing and commerce. Additionally, a defence sector would protect its hydrocarbon industry, as many high-tech defence products require hydrocarbon fuel e.g. AVGAS for jets and hydrazine for missiles.
Moreover, the UAE’s neutral political stance and pragmatic foreign policy enables the UAE to maintain positive international relations across a variety of geopolitical divide; positioning it as a unique and attractive arms supplier. This neutrality allows the UAE to sell weapons to a large pool of clients, including those aligned with competing blocs (e.g. EU, NAFTA, CSTO, Brics etc), without the same level of geopolitical constraints faced by traditional arms-exporting nations. By leveraging its reputation as a reliable and apolitical partner, the UAE can expand its defense exports globally, boosting its economic resilience while expanding its influence on the international stage.
Regional Influence
Although small, the UAE has ambitions to position itself as an autonomous regional power; this is backed up by the UAE’s statement to the UN, “We must safeguard regional and international stability, including the security of international navigation, trade routes, and energy supplies”. The UAE is in a region characterised by constant conflict, proxy groups and terrorism. Many neighbouring small states such as Lebanon have fallen victim to becoming vehicles of proxy groups and the ambitions of regional powers such as Iran. Even the more politically stable and wealthy small states such Kuwait have had their national security severely compromised i.e. Iraq invasion of Kuwait in 1990. Although the UAE pursues a “Zero Enemy Policy” the reality is that it is surrounded by states and non-state actors that look to exploit and weaken its position. These include Iranian backed militias such as the Houthis, Islamic fundamental groups such as the Muslim Brotherhood affiliated Al-Islah, Iran and even Turkey.
The Houthis, armed with Iranian-supplied ballistic missiles have repeatedly targeted the UAE in response to their involvement in the Yemen War. Notably, the Houthis launched several drone and missile attacks on critical Emirati infrastructure, including airports and oil facilities. For example, in 2018, Houthi forces claimed responsibility for a drone attack on Abu Dhabi International Airport, although the UAE denied significant damage. In January 2022, these threats resulted in a series of highly publicized attacks, including the targeting of fuel storage facilities near Abu Dhabi’s airport, resulting in 3 civilian deaths and demonstrating the Houthis' growing reach.
These attacks not only threatened the UAE’s economic lifelines, oil exports and tourism, but also showcased the vulnerabilities of relying solely on foreign-supplied defense systems like the U.S.-manufactured Patriot missile defense. Although this resulted in the acquisition of alternative air defence systems, such as the Russian Pantsir-1, the Houthis’ usage of cheap swarming drones and ballistic missiles make these solutions uneconomical against such an asymmetric force.
By developing weapons domestically, it allows the UAE to create tailor made solutions for the challenges it faces. Additionally, by producing advanced weaponry and systems locally, the UAE strengthens its deterrence capabilities, making it less reliant on foreign intervention to address security threats. The MIC opens opportunities for arms exports, which can bolster diplomatic relationships via defence diplomacy and allow the projection of influence in regions where the UAE has strategic interests, such as North Africa and the Horn of Africa.
Strategies the UAE is Employing to Build an MIC
The UAE has employed a variety of strategies that either directly or indirectly further the goal of establishing a domestic MIC. Specifically, the establishment of its defence conglomerate EDGE, the creation of the IDEX defence expo, creation of an academic sector to create a steady stream of Emirati technical graduates and strategic hedging partnerships. The UAE has already invested significant capital and funding such as its 2023 defence budget being $23.3 Billion (4th largest in the Middle East). However other neighbouring states like Qatar and Kuwait have also invested significantly into defence yet still have not achieved an MIC. Emirati leadership realises this and has conducted other strategies.
Establishment of EDGE and IDEX
EDGE was formed in 2019 as a reformed version of EDIC, its predecessor. It is a state-owned conglomerate of 25 high-tech defence firms; EDGE looks to streamline and enhance the efficiency of the UAE defence sector. This is done by agglomerating major domestic tech industries allowing for efficient knowledge transfer, R&D and collaboration. EDGE focusses on high-tech smart weapons, such loitering munitions, cyber defence and autonomous systems. EDGE also acts as a simplified arms export wing of the UAE, making international sales simpler for the defence sector. EDGE also seeks global partnerships to further increase the rate of tech development; in 2022 EDGE signed deals with Lockheed Martin, Raytheon and Embraer for the construction of drones and robots. EDGE’s recent deals have also been used to further diplomatic relations with friendly states such as Israel and India, leveraging defence diplomacy. for example in 2025, EDGE invested over $22 million in Thirdeye Systems, an Israeli defence firm that focuses on AI recognition of UAVs, relevant to detecting Houthi drones. This deal also demonstrates the growing technological cooperation between the UAE and Israel. EDGE also has sold domestic weapons to the international market; notably the Al Tariq Precision Guided Missile, these missiles are a high tech PGM that have been sold to both the Saudi and Egyptian militaries, an example of the UAE’s budding defence sector.
IDEX is a defence expo held biennially in Abu Dhabi and is a significant global defence conference. Defence firms and startups from NATO, Russia and China showcase their latest weapons developments here. As such IDEX fosters partnership, dealmaking and elevating Emirati prestige, integral to creation of its MIC. IDEX is more than just a defense exhibition; it is a strategic tool for the UAE to advance its defense and economic objectives.
In recent years, IDEX has significantly expanded its scope to include cutting-edge technologies including artificial intelligence (AI), autonomous systems, cybersecurity, and unmanned aerial vehicles (UAVs). The expo now features dedicated pavilions and panels focused on emerging trends such as drone swarms, AI-driven decision-making systems, and cyber defense platforms. Emirati firms, led by EDGE Group, use IDEX as a launchpad to demonstrate their innovations in these areas. IDEX serves as a key platform for the UAE to strengthen its defense exports. By hosting an event that attracts buyers and leaders from around the world, the UAE can promote its own defense products such as the Al-Tariq PGM. his aligns with the UAE’s broader strategy of diversifying its economy, reducing reliance on hydrocarbons, and asserting its influence as an autonomous regional power. IDEX has evolved into more than just a showcase of defense technology. It is a strategic pillar of the UAE’s ambitions to create a domestic defence sector, diversify its economy and foster its diplomatic neutrality.
Human & Knowledge Capital Development
The UAE is a nation that heavily relies on a foreign labour force for both its blue-collar and white-collar work. This is a major vulnerability to the UAE, as any negative impact on wages, economic outlook could lead to brain drain – the defence sector would be especially vulnerable. To counter this, the UAE has begun to create an academic sector in the country. The UAE has incentivised European and US higher education institutes to either partner or open up academies in the UAE; NYU, University of Manchester, Rochester Institute of Technology and many more are operating within the UAE. This has a dual purpose; it diversifies the Emirati economy and ensures a constant flow of Emirati residents to gain higher education – protecting its knowledge capital that is needed for an indigenous MIC.
Strategic Hedging & Partnerships
A key aspect of Emirati grand strategy is the use of strategic hedging (the act of simultaneously cooperating and competing with multiple powers to maintain diplomatic flexibility). The UAE has used this policy extensively since the 1980’s to maintain and upgrade its arsenal with US, Russian and Chinese weaponry. Some notable examples are: 2 THAAD batteries from the US in 2012, purchase of Falcon Eye reconnaissance satellites from Airbus/Thales to the UAE in 2014 . However, the UAE also leverages non-western players such as Russia and China, integral to its Zero Enemy Policy, such as abstaining from the UNSC vote on condemning the invasion of Ukraine and partnering with Huawei to develop the UAE’s 5G network. The UAE has doubled down with its strategic hedging as an Emirati official has stated “[The UAE] aimed to diversify its risks by going to Russia and China and others for deals and weapons. And it succeeded”. Whilst this has had backlash from the US, such as the Huawei 5G deal seeing the suspension of talks of a $23B on the sale of 50 F-35s, the UAE saw this as an acceptable loss, as the 5G deal also acted as a gateway for future deals with China.
Another lesser-known aspect to the UAE’s use of strategic hedging is how it uses this strategy to build hard capital within its borders. The UAE and Russia have ratified multiple arms deals where a condition is that the weapons must be made within the UAE. This is a net benefit for both parties as it creates hard industrial capital for the UAE (integral for a domestic MIC) and puts less capacity strain on Russian manufacturing. Examples of this is the 2017 5th generation fighter jet agreement with Russia – where Russian fighter jets and engines would be domestically produced in the UAE, and the 2013 deal with Yogoimport, a Serbian firm, to build and jointly develop an ALAS cruise missile. The Yogoimport was also critical for the UAE to obtain the savoir-faire of high-tech cruise missiles, a secret guarded within developed NATO members.
Challenges and Recommendations
The UAE has made major strides in the development of its MIC, whilst balancing its position between regional and global actors. Creating a successful domestic MIC will allow the UAE to enhance its prestige in the world, diversify its economy and enforce its security. However, there are serious challenges and hurdles that the Emirati leadership must anticipate. The ability to adapt to these challenges will be integral to the success of the Emirati defence industry.
High initial investment costs
The UAE is an exceptionally wealthy small state and has managed to leverage its large oil reserves; however, a negative impact to the oil market will dictate the amount of funding and support the UAE can inject into EDGE and its strategic partnerships. It will also dictate if the UAE will be able to reach its expected funding of $129 Billion. Maintaining long term defence funding is extremely challenging, especially with the uncertainty of the energy market.
The defence sector also has a long gestation period, meaning that it will take longer to realise profits after initial investment. This has two impacts; it will take longer to reach true self-sufficiency, and it will be challenging to balance long term goals with short term expenditures.
Recommendation
- Diversify defence funding sources by encouraging private sector investment through public-private partnerships (PPPs)
- Establish sovereign wealth fund initiatives focused on defense R&D to reduce reliance on short-term government budgets
Dependence on foreign Human Capital
The UAE relies heavily on foreign workers, both for high-end white-collar work and for blue-collar labour. There is a very limited domestic pool of Emiratis capable of working in the defence sector for highly specialised roles. As such, the UAE has to compete with other foreign defence hubs like the US, UK, France and Russia for recruitment, ultimately requiring a more attractive package for these workers.
The UAE, however, faces a greater challenge with lower skilled blue-collar workers. These are low paid workers mainly coming from central Asia or sub-Saharan Africa. Whilst many of these workers will be ineligible to work in defence plants (due to security clearance), they are required in ancillary industries such as hydrocarbons and shipping. These workers are the most susceptible to socio-economic crises, due to having a lower salary, and thus will emigrate to other nations if they feel poverty. Ultimately increasing the cost of labour
Recommendations
- Create scholarships and training programs to encourage Emirati students to specialise in engineering, robotics, and AI.
- Conduct Emiratisation i.e. the elevation of Emirati citizens to key positions in the state and the private sector to reduce the reliance on foreigners.
- Develop long-term career pathways and competitive benefits to retain skilled professionals in the defence sector.
- Ensure there are welfare packages that will protect blue-collar workers and their families in times of crises.
Global Competition
The defence sector is a crowded market and is dominated by well-established players with decades of experience, making it difficult for the UAE to penetrate international markets. Additionally, defence is a high-trust industry, many products and deals are made as a direct result of consumer-producer trust. The UAE’s MIC is still in its infancy and will take time for it to develop its global trust
Recommendations
- Focus on niche markets, such as unmanned systems and cybersecurity, where the UAE can compete effectively.
- Build a strong reputation for quality and reliability through rigorous testing and performance standards for defence products.
- Create more bilateral arms trade agreements.
- Establish innovation hubs and incubators dedicated to defence technology, encouraging local startups and SMEs to contribute to the MIC
Potential Embargoes
The UAE has shown itself to be adept in omni-balancing and strategically hedging between states. However, alliances and geopolitical conditions are constantly shifting and are largely unpredictable. There is also a higher risk that the UAE will struggle to strategically hedge between China and the US when high tech weaponry is concerned. This is further demonstrated by how the impact on US-UAE relations in 2021 after it was discovered China covertly attempted build a military facility in the UAE. There is a potential that the use of strategic hedging fails, and the UAE will become sanctioned or face embargoes if a global power feels undermined. This would cut out entire markets and potentially cripple the young Emirati MIC.
Recommendations
- Balance diplomatic engagements with major powers to reduce geopolitical tensions.
- Establish contingency plans to address potential disruptions in foreign technology supply chains.
- Diversify procurement and partnership sources to avoid over-reliance on any single country.
Global Scrutiny
As arms exports grow and Emirati weapons are used in foreign conflicts, there is a high likelihood that the UAE will face criticism and protest from foreign NGOs, activists and adverse states. These could interrupt deals, expos like IDEX and impact the UAE’s reputation.
Recommendations
- Join and Adhere to Key Treaties e.g. Arms Trade Treaty (ATT) and Wassenaar Arrangement.
- Align with UN Guidelines.
- Develop a Transparent Arms Export Policy.
- Establish Oversight and Accountability Mechanisms i.e. independent monitoring.
- Leverage western PR firms to spread public image and awareness to secure its goals e.g. Glover Park Group
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The Future of the UAE’s MIC
The UAE’s investment into defence represents a pivotal strategy for ensuring its long-term national security, economic resilience, and regional influence. Despite significant challenges, including high costs, technological dependencies, and global scrutiny, the UAE’s approach—based on strategic partnerships, technological innovation, and human capital development—positions it as a rising power in the global defence sector.
Looking ahead, the future of the Emirati MIC depends on its ability to adapt to emerging technologies such as cyber, AI and autonomous machines. By focussing on cutting-edge tech, the UAE can solidify itself as a leader in high tech defence exports. The UAE can also leverage its position as a global honest broker to build trust and arms sales agreements between a variety of states. The MIC’s success will also depend on creating sustainable growth through continuous investment in R&D, knowledge transfer, and the development of a skilled workforce.
As the UAE balances its ambitions with regional and global considerations, its MIC has the potential to redefine the nation’s role in the Gulf and beyond. The UAE’s MIC can serve as a model for small (albeit wealthy) states seeking to achieve strategic autonomy and resilience in an increasingly complex world.
