Over the next 3-5 years, these two states, militarily the most powerful Arab nations in the Persian Gulf, are expected to spend some $100 billion between them on arms procurement.

Of this, they will request $24 billion and $21 billion respectively in offset obligations, said Grant Rogan, chief executive of Blenheim Capital Services Ltd., an offset advisory service based in the United Kingdom.

He told Jane's Defense Weekly that the two countries' offset programs "have been largely the same for the past 20 years" and now need to be overhauled to maximize their opportunities to expand their emerging defense industries.

The administration of President George W. Bush announced in 2007 that it had drawn up a $20 billion package of arms sales to its allies in the six-member Gulf Cooperation Council -- Saudi Arabia, the Emirates, Kuwait, Oman, Qatar and Bahrain -- as well as Egypt and Jordan over the following 20 years.

This was primarily to bolster their defenses against an expansionist Iran that was allegedly driving to acquire nuclear weapons, thus threatening U.S. and Arab interests in the region, particularly energy supplies.

But it also opened up a whole range of deals for advanced systems through which Saudi Arabia and the Emirates, both key oil producers, could extract considerable advantages for their nascent defense industries.

Washington traditionally has been leery of providing U.S. technology to Arab states, in large part because Israel claims that would erode the qualitative edge over its regional adversaries that the United States has sworn to uphold.

But as the U.S. defense industry has come to rely increasingly on foreign military sales to keep production lines running to equip U.S. forces, such restrictions have been steadily easing in recent years.

These sales, many of them in the Middle East, have sustained key U.S. weapons systems when U.S. defense budgets were being cut back.

"Such sales reduce the price of the platforms that the U.S. military acquires, allows for modernization of existing systems and provides for greater interoperability with U.S. forces," U.S. analyst Daniel Goure wrote earlier this month on the Early Warning Blog.

For instance, the sales of hundreds of M1A1 Abrams tanks to Saudi Arabia and Egypt "provided sufficient additional funds to allow the Army to proceed with development of the M1A2," Goure noted.

In recent years the Emirates in particular has insisted that all contracts with foreign arms manufacturers include high-tech transfers, and Abu Dhabi, the federation capital, has sometimes invested in the development of weapons systems it seeks, giving it unprecedented influence in shaping these systems.

These days the focus is primarily on missile defenses and air power to counter the perceived Iranian threat.

This is in Washington's strategic interest, suggesting that it may be more amenable than ever to participate in big-ticket offset deals that will enhance the Saudi and Emirati defense industries.

But Steven Cahall, vice president of BCSL, told Jane's that the aspirations of Saudi Arabia and the Emirates in the "air defense element … may exceed what U.S. suppliers can provide through technology transfer projects."

Saudi Arabia introduced its offset program in 1984, when Boeing won the lead contractor role in the $3.8 billion Peace Shield contract -- a massive deal at the time -- with the Defense Ministry in Riyadh to build an air-defense system.

Boeing assumed responsibility for managing a 35 percent offset obligation.

The Emirates launched its offset program in the early 1990s, in the surge of military procurement in the Gulf that followed the 1990-91 Gulf War with Saddam Hussein's Iraq.

Jane's says the reviews of offset legislation that is currently under way are aimed at capitalizing "on the defense industrial opportunities that will be presented by a bow wave of procurement expenditure" in the Arab states.

The magazine quoted BCSL as noting that offset programs will be recalibrated to embrace a "wider focus on the employment of skilled indigenous workers, the transfer of technology and the facilitation of defense export activity."

earlier related report
Australia readies to take six more Hornets
Canberra, Australia (UPI) Jun 25, 2010 - The Australian air force said it will fly six more new F/A-18F Super Hornets from the United States to Australia in early July.

The planes will be stationed at the Royal Australian Air Force base in Amberley in the northeast state of Queensland.

Minister for Defense John Faulkner said a detachment of RAAF aircrew and maintenance personnel from No. 1 Squadron is conducting work-ups with the aircraft at the Naval Air Station Lemoore, Calif.

"The detachment is completing comprehensive flight testing which includes up to 96 hours of test and evaluation flying and two weeks of electronic warfare flight trials from Lemoore," Faulkner said in a written statement.

"Another key task involves working with an air-to-air tanker conducting day and night refueling flights to ensure we are ready for the flight to Australia."

The arrival of the six planes means almost half of Australia's 24 Super Hornets will be based at RAAF base Amberley, around 30 miles southwest of Brisbane and near the coast of Queensland.

The first five Super Hornets arrived in March at Amberley where pilots have been conducting familiarization training and flights.

By the end of 2011, all 24 Super Hornets will be in Amberley, Australia's most important base with the country's largest number of personnel, 3,500 military and civilians.

Amberley also is home to No. 6 Squadron that operates the General Dynamics F-111, the No. 33 Squadron that is awaiting delivery of the Airbus KC-30A and No. 36 Squadron with its Boeing C-17 Globemaster III transports.

Also, army units of the 9th Force Support Battalion are in Amberley, designated the country's "super-base." It is undergoing $55.5 million of redevelopment due for completion in 2015.

The airfield was a major U.S. Air Force base during World War II in 1942 and 1943. Amberley, along with Darwin International Airport, is an emergency landing site for the space shuttle.

The F/A-18Fs are a bridging capability before Australia takes delivery of the expected Joint Strike Fighter.

"The Super Hornet project has been a fine example of team work," said Faulkner.

"Reaching this stage of the project on time and on budget has been due to the great partnership between the Royal Australian Air Force, Defense Materiel Organization, United States Navy, the Boeing Company and their industry partners, General Electric, Northrop Grumman and Raytheon."

In a separate delivery, BAE Systems, together with partners Navistar Defense and ArvinMeritor, handed over three light-tactical vehicle prototypes to the Australian military.

The vehicles, although in right-hand drive, are configured to be highly compatible with the U.S. variants to enhance interoperability between the armies of both countries.

U.S. Army Joint Light Tactical Vehicle product manager Mark McCoy said Australia's participation in the JLTV program, signed in January 2009, will help reduce overall program risk through the testing and evaluation of additional prototype vehicles.

"The similarity of tactical vehicle solutions across allies will enhance global interoperability and reduce the maintenance and logistical burden," he said.

The prototypes will undergo durability, reliability and blast testing as well as tropical environment testing in Australia.

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