Firepower and Foresight: Why Middle Eastern Defense Budgets are Betting Big on AI
GeoStatecraft | July 2025
In the theater of global power projection, the Middle East remains both a crucible and proving ground for 21st century warfare. From sprawling U.S. bases in Qatar and Bahrain, to Israeli drone strikes and Emirati backed mercenary operations in Africa, military expenditures in the region offer a window to shifting threat perceptions, ambitions and anxieties. The latest SIPRI data on military spending from 1949 to 2024 confirms what many analysts have long suspected: the volume of spending matters less than the strategic logic behind it. Increasingly, that logic, is being rewritten in the language of Artificial Intelligence (AI).
For powers like the United States, Israel, Saudi Arabia, the United Arab Emirates (UAE) and even Qatar, the question is no longer just how much to spend, but how to spend smartly in an age where the battlespace is algorithmic, borderless and asymmetric. This essay dissects the trajectory of defense budgets across these five countries, using SIPRI data and recent events to chart a deeper pattern. The collective shift from conventional firepower toward digital foresight.
Overreach to Overwatch: United States of America
At about USD 997 billion annually in 2024, the U.S. military spending remains unprecedented, comprising nearly 38% of global defense expenditure. The failures of large-scale interventions in Iraq and Afghanistan have sobered Washington’s appetite for boots-on-the-ground warfare in the Middle East. American strategy now, instead, emphasizes presence without permanence -- forward deployed assets, drone bases and off-shore balancing.
The pivot towards Artificial Intelligence is central to this transformation in American strategy. Project Maven, launched in 2017, uses machine learning to analyze drone footage at scale, accelerating the kill chain. JADC2 (Joint All-Domain Command and Control) aims to create a real-time digital architecture connecting sensors across air, land, sea, space and cyberspace. In effect, the U.S. is using AI to impose coherence on chaos, coordinating allies and assets in increasingly contested domains.
For its Middle Eastern partners, this presents a double-edged sword of greater interoperability, but also greater dependence.
Buying Power, Chasing Sovereignty: The Kingdom of Saudi Arabia
Saudi Arabia’s USD 80 billion defense budget ranks it among the top five global spenders. Historically reliant on American and British arms, Riyadh is now trying to diversify and indigenize. Vision 2030, Crown Prince Mohammed bin Salman’s grand blueprint for national transformation, includes a mandate to localize 50% of defense spending by 2030.
To this end, the Kingdom launched Saudi Arabian Military Industries (SAMI), a state-owned conglomerate tasked with building everything from drones to AI command systems. Saudi investments in predictive maintenance platforms, satellite analytics and autonomous surveillance aim to reduce the burden on manned forces while increasing resilience against regional threats, namely Iran, its proxy – the Houthi rebels and cyberattacks.
The Yemen war, however, has revealed the limits of procurement without performance. Despite massive spending, Saudi forces have struggled to counter asymmetric tactics. Riyadh’s real test does not lie in its ability to purchase AI, but in its ability to build the institutional capacity to wield it.
The Laboratory State: United Arab Emirates
With a smaller but agile budget, approximately USD 25 billion, the UAE has carved out an outsized role in regional geopolitics. From Libya to Yemen and the Horn of Africa, Abu Dhabi has pioneered a hybrid model of warfare that blends economic leverage, elite special forces and cyber capabilities.
The EDGE Group, the UAE’s crown jewel of defense innovation, was ranked among the top 25 arms producers globally in 2020. It specializes in autonomous systems, electronic warfare and AI enhanced ISR (intelligence, surveillance and reconnaissance). Emirati drones have patrolled shipping lanes, while AI software has been used for urban surveillance and border control.
What makes UAE distinctive is its ability to integrate Western technology with localized strategy. Investing in AI startups, satellite networks and digital warfare training, positions the UAE not merely as a consumer of defense tech but also as a co-developer. This model has enabled it to project power far beyond its geography.
The Algorithmic Arsenal: Israel
Israel’s defense spending, which had looked modest by American or Saudi standards, was approximately USD 27 billion in 2023. This was followed by a huge surge to USD 46 billion in 2024, owing to the ongoing conflict in the region. In terms of battlefield efficacy and technological integration, Israel is arguably peerless.
The IDF’s Momentum Plan, launched in 2020, envisions a military with the ability to operate at “machine speed”. During the 2023 Gaza conflict and subsequent skirmishes with the Hezbollah, Israel demonstrated unparalleled integration of AI into real-time combat with AI-assisted targeting, autonomous drones and predictive intelligence fused into a common operational picture. Units such as the elite Unit 8200 have become the envy of cyber forces worldwide.
Israel also benefits from U.S. funding, which supports its missile defense systems such as the Iron Dome, David’s Sling and Arrow-3. These systems not only protect Israeli cities, but also serve as platforms for continuous AI experimentation.
Yet technological superiority brings strategic dilemmas. Over reliance on automated systems can create overconfidence. Moreover, as regional public opinion turns against normalization of the use of automated weapons systems, Israel risks becoming a hyper-connected fortress, isolated despite its clear edge.
The Niche Strategist: Qatar
Often overshadowed by its louder neighbors, Qatar has quietly but significantly expanded its military capabilities. With its defense spending approximately at USD 14.5 billion annually, Doha’s strategy involves investments in select areas that matter and not in those aimed at matching firepower.
Barzan Holdings, Qatar’s state-owned defense and security firm, partners with universities like Carnegie Mellon Qatar for scientific research to develop indigenous AI capabilities in cybersecurity, early warning systems and drone defense. While not publicly confirmed in AI-focused NATO drills, Qatar has taken a key step in aligning with Western defense paradigms by joining NATO’s OCC (Operational Capabilities Concept) Program, signaling its preparedness to engage with allied systems that increasingly incorporate AI-enabled decision tools.
Qatar’s emphasis on human capital, training, simulations and academic defense research, could yield long-term dividends. Its overt diplomatic strategy, playing mediator across conflicts, complements a military posture focused on deterrence rather than domination.
When does Conflict drive spending?
SIPRI data suggests that there are two scenarios in which Middle Eastern defense spending spikes: when regime security is threatened (e.g., Arab Spring) and when regional conflict escalates (e.g., Yemen, Syria, Red Sea shipping threats).
· In 2011, Egypt, Saudi Arabia and the UAE rapidly increased their defense budgets post the Arab Spring.
· The 2015, Saudi-led intervention in Yemen saw an immediate jump in procurement.
· Israel and the Gulf states responded to the 2018, U.S. withdrawal from the Iran nuclear deal with renewed missile defense investments.
· Most recently, Houthi maritime attacks in the Red Sea triggered escalated spending on naval surveillance and anti-ship systems.
However, it is important to note that the correlation isn’t always linear. Anticipatory spending often precedes actual conflict, suggesting that budgets reflect perceived vulnerability as much as real-time combat needs.
Artificial Intelligence as the Great Equalizer and Risk Multiplier
Each country assessed above, has pursued AI integration with a unique logic:
- The United States has sought global battle network dominance through institutional programs like JADC2 and DIU (Defense Innovation Unit).
- Saudi Arabia has focused on sovereignty through localization and defensive autonomy.
- UAE has prioritized agility through AI-enabled expeditionary warfare and power projection.
- Israel has pursued battlefield dominance through full-spectrum AI deployment.
- Qatar has pushed for strategic deterrence through human capital and niche capability building.
AI, however does introduce new strategic vulnerabilities in the region:
- Algorithmic escalation: As AI can misinterpret intentions, it can lead to inadvertent warfare.
- Data dependency: AI effectiveness is dependent on secure, clean data, a vulnerability in unstable regions.
- Ethical opacity: Automated targeting raises legal and moral concerns.
- Asymmetric proliferation: Even non-state actors are acquiring AI tools for propaganda, cyberattacks and surveillance.
One of the biggest challenges for the Middle Eastern states is to harness AI without becoming its hostage.
Strategic Takeaways:
More isn’t better: The United States and Saudi Arabia demonstrate that outsized spending without institutional synergy is wasteful.
Tech is a force multiplier, not a substitute: Israel and the UAE show that small, smart forces can outperform larger ones.
Localization matters: Indigenous innovation (Israel, UAE) yields more operational flexibility than imported systems.
Human capital is strategic capital: Qatar’s long game may prove more sustainable than high-octane arms races.
AI is not apolitical: Its deployment shapes, and is shaped by, diplomatic and ideological narratives.
Conclusion: Toward a New Military Modernity
The Middle East is entering an age where traditional indicators of strength, tank battalions, air squadrons, GDP-share of defense budgets, are all becoming secondary. What will matter is the capacity to anticipate, adapt and act at “machine speed”. This is a redefinition of how force is projected, sustained and made credible and not a rejection of firepower.
For the United States, this would mean balancing technological dominance with alliance resilience. For Saudi Arbia it would mean marrying procurement with doctrine. For the UAE, it would mean continuing its tech-driven assertiveness without overreach. For Israel, this would mean managing the paradox of being hyper-secure yet diplomatically exposed. For Qatar, it would mean proving that in the age of AI, its smart restraint can translate, somehow to a form of hard power.
The next conflict in the Middle East is already set to be coded in algorithms, trained in simulators and executed in milliseconds. Failure to recognize this would lead to being outmaneuvered not just on the battlefield, but in the very architecture of future power.
Sources:
1. SIPRI Military Expenditure Database. https://www.sipri.org/databases/milex
2. U.S. Department of Defense JADC2 Program: https://www.defense.gov/News/Releases/Release/Article/2970094/dod-announces-release-of-jadc2-implementation-plan/
3. EDGE Group UAE: https://www.defenceprocurementinternational.com/news/land/edge-has-been-named-among-the-top-25-military-suppliers-in-the-world-by-sipri
4. Saudi Arabian Military Industries (SAMI): https://www.sami.com.sa/about
5. Israel Defense Forces Momentum Plan: https://besacenter.org/idf-momentum-plan/
6. Barzan Holdings Qatar: https://www.qatar.cmu.edu/news/barzan/
7. NATO – Qatar OCC Program: https://jfcnaples.nato.int/newsroom/news/news-archive/2024/qatar-land-units-declated-into-nato-occ-programme-successfully-accomplished-level-1-evaluation-