February 24, 2015 / 1:48 PM / 2 years ago

Firms see drone sales in Gulf surging after U.S. eases export policy

3 Min Read

A U.S.-led coalition unmanned aerial vehicle flying over Kobani is pictured from Suruc in Sanliurfa province, October 13, 2014.Umit Bektas

Abu Dhabi (Reuters) - U.S. drone makers are expecting a surge in sales of military and civilian drones to Gulf states after the State Department eased export rules last week, industry executives said on Tuesday.

U.S. aerospace and arms companies have been pressing the U.S. government for years to ease restrictions on foreign sales of unmanned aerial vehicles - UAVs or drones - arguing that other countries such as Israel are overtaking them.

Critics argue that drone strikes kill too many civilians and violate sovereignty.

General Atomics won a $200 million contract in 2013 from the United Arab Emirates for supply of an unspecified number of predator drones, the first such sale in the region. Deliveries can now begin around April 2016, Frank Pace, the company's president, aircraft systems, said.

“With this new policy, we see a lot more activity, we are talking to a lot more countries in the Middle East,” he said on the sidelines of the International Defence Exhibition in Abu Dhabi.

The company is also in talks with Saudi Arabia and some other countries, he said, declining to be more specific.

Other U.S. manufacturers were equally upbeat and joint ventures were in their sights with Gulf partners aiming to develop domestic capabilities.

Lockheed Martin (LMT.N) is aggressively pitching for joint ventures, Lockheed's country director for Jordan, Iraq, UAE & Pakistan, James Hedges, said.

“This region is a growing market, we are actively working on contracts,” he said without elaborating. The firm has an existing joint venture with Mubadala’s MUDEV.UL aerospace unit, owned by the Abu Dhabi government.

UAE firms such as Adcom Systems, Abu Dhabi Autonomous Systems Investments (Adasi) and International Golden Group are already building UAV operational and maintenance capabilities in ventures with firms from the United States, France and Spain.

“In the next five years, we will see increased use of unmanned systems and we are looking at new partnerships,” Adasi chief executive, Ali al Yafei, said, noting that the UAE is investing in both military and civilian systems.

“With a growing threat from extremist groups, the advantages that UAVs offer in providing surveillance and even strike capabilities, are compelling,” Teal Group's director-corporate analysis, Philip Finnegan, said.

The group sees a $4.5 billion UAVs market over the period from 2014 to 2023 in the Middle East, representing about 10 percent of the global UAVs market during that period.

Editing by Louise Ireland

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