Samer Choucair: $173 Billion Is Reshaping the Map of Arab Defense Spending in 2026
Investment leader Samer Choucair said Arab defense budgets in 2026 should be viewed not only as indicators of military capability, but also as increasingly important economic and investment variables. The scale and direction of spending are reshaping government demand across defense manufacturing, technology, cybersecurity, logistics, maintenance, and regional supply chains.
Choucair said Global Firepower’s 2026 estimates place Saudi Arabia at the top of the Arab world in terms of defense budget, at approximately $63.99 billion, ranking eighth globally. Algeria follows at around $25 billion, the United Arab Emirates at $23.48 billion, Morocco at $16.1 billion, and Qatar at $11.95 billion, followed by Oman, Iraq, Kuwait, Egypt, and Jordan. Based on the same dataset, the combined defense budgets of the ten leading Arab countries amount to roughly $172.7 billion.
Samer Choucair cautioned, however, that these figures should not automatically be treated as equivalent to actual military expenditure. Budget allocations and military-spending databases can differ significantly in methodology and scope. SIPRI, for example, estimates that global military expenditure reached $2.887 trillion in 2025, while spending in the Middle East stood at approximately $218 billion. Under SIPRI’s methodology, Saudi Arabia spent an estimated $83.2 billion, making it the world’s eighth-largest military spender in 2025.
For Choucair, the distinction matters because institutional investors are not simply looking for the largest headline budget. They are looking for the economies capable of converting defense expenditure into recurring industrial demand, local technological capacity, and sustainable economic value.
Saudi Arabia and the Localization of Defense Spending
Choucair said Saudi Arabia represents the most important case for investors because the Kingdom is increasingly linking defense expenditure to domestic industrial development.
Saudi Arabia allocated approximately SAR 240 billion, or around $64 billion, to the military sector in its 2026 budget. At the same time, Vision 2030 data show that the localization rate of military industries reached 24.89% in 2024, compared with a 2030 target of 50%. The number of establishments operating in the sector has also expanded substantially as licensing and procurement increasingly integrate domestic suppliers into defense value chains.
According to Samer Choucair, that creates a fundamentally different investment proposition from traditional defense spending based almost entirely on imports.
“The investment question is no longer simply how much the government spends,” Choucair said. “The more important question is how much of that expenditure remains inside the domestic economy through manufacturing, maintenance, engineering, software, electronics, and advanced systems.”
As localization increases, a growing proportion of Saudi defense spending could translate into demand for domestic manufacturing, maintenance and repair operations, advanced electronics, communications systems, unmanned platforms, cybersecurity, artificial intelligence, and specialized engineering.
For institutional investors, Choucair said the opportunity lies in identifying companies that can participate in those supply chains while developing technical capabilities that remain economically valuable beyond a single procurement cycle.
From Procurement Budgets to Industrial Ecosystems
Choucair said sophisticated investors do not evaluate the sector purely on the size of individual defense contracts.
They assess whether governments have the fiscal capacity to fund those contracts over extended periods, whether procurement programs are embedded in long-term national strategies, and whether participating companies can convert government spending into sustainable margins, intellectual property, technological capabilities, and local employment.
This makes areas such as air-defense systems, drones, cybersecurity, artificial intelligence, advanced maintenance, electronics, command-and-control technologies, and logistics particularly relevant from an investment perspective.
Samer Choucair said the strongest defense-related investment opportunities are likely to emerge where military procurement overlaps with technologies that have broader commercial applications.
Cybersecurity capabilities developed for government or military infrastructure can be deployed across banks, energy networks, telecommunications, and industrial facilities. Artificial intelligence and autonomous systems can move into logistics, manufacturing, aviation, and infrastructure. Advanced maintenance and engineering capabilities can similarly support civilian aerospace and industrial sectors.
In that sense, defense localization can become an industrial-policy instrument rather than simply a security expenditure line.
Algeria: High Spending Meets Fiscal Pressure
Choucair said Algeria offers a different model.
The International Institute for Strategic Studies estimates Algeria’s 2026 defense budget at approximately $24.5 billion, down around 4% in nominal terms from roughly $25.5 billion in 2025. After inflation, the decline is even larger. IISS said the reduction may reflect growing fiscal constraints following a period of exceptionally rapid expansion in defense spending.
Algeria nevertheless continues to devote a very large share of its economy to defense. IISS estimated that defense spending represented around 8.9% of GDP in 2025, before falling toward 7.7% under the 2026 budget.
Choucair said the Algerian case illustrates why investors must distinguish between a high level of spending and the long-term sustainability of that spending.
A defense budget can create significant short-term demand, but if it places growing pressure on public finances or depends heavily on volatile hydrocarbon revenues, the risk profile becomes materially different from that of an economy capable of financing defense expenditure alongside broader economic diversification.
What Institutional Investors Are Actually Watching
For Samer Choucair, the central investment issue across Arab defense markets is the transition from procurement toward domestic value creation.
Government contracts can generate immediate revenue, but the more durable opportunity lies in companies that become embedded in long-term national supply chains through local manufacturing, maintenance, software, engineering, cybersecurity, electronics, and specialized services.
This means investors increasingly need to evaluate defense businesses in the same way they would assess other industrial companies: through margins, capital intensity, recurring revenue, technological differentiation, backlog quality, customer concentration, and return on invested capital.
The size of national budgets matters, but so does the percentage of procurement that is localized, the duration of contracts, the ability of companies to export, and the extent to which their intellectual property can be used in civilian markets.
Choucair said this becomes particularly relevant as Gulf economies seek to develop more complex industrial ecosystems.
A defense supplier capable of producing components locally, developing software, providing long-term maintenance, and expanding into export markets may generate far greater economic value than a business functioning primarily as an intermediary for imported equipment.
The Wider Economic Impact
Defense spending also has implications beyond defense companies themselves.
Large procurement programs can create demand for logistics centers, industrial land, data infrastructure, specialized financing, insurance, training, engineering services, and advanced manufacturing facilities.
They can also accelerate the development of domestic supply chains in areas such as electronics, precision manufacturing, aerospace components, communications, and software.
Choucair said this makes defense expenditure increasingly relevant to banks, private-equity investors, infrastructure funds, technology investors, and sovereign wealth funds rather than only to traditional aerospace and defense companies.
In Saudi Arabia in particular, the localization agenda means defense spending can increasingly interact with the broader industrial transformation under Vision 2030.
The investment story therefore extends beyond weapon systems themselves. It includes the factories that produce components, the companies providing maintenance, the software businesses securing networks, the training institutions developing technical skills, and the logistics infrastructure connecting those activities.
The Strategic Investment Outlook
Samer Choucair said the roughly $173 billion represented by the leading Arab defense budgets should therefore be interpreted as more than a measure of regional military expenditure.
It represents a large pool of government demand capable of influencing capital formation, industrial policy, technology development, and supply-chain investment across the Arab world.
But Choucair stressed that higher defense spending alone does not automatically create attractive investment opportunities.
“The real opportunity is not simply in increasing defense expenditure,” he said. “It is in the ability of Arab economies to transform that expenditure from an import bill into a domestic industrial and technological base.”
For investors, that means distinguishing between countries that primarily purchase finished systems from abroad and those building domestic ecosystems around manufacturing, maintenance, cybersecurity, electronics, artificial intelligence, and advanced engineering.
Choucair concluded that the most successful long-term strategy will be one that balances national-security requirements with fiscal sustainability and civilian economic development.
For Samer Choucair, the investment winners of the next phase will not necessarily be the markets with the largest defense budgets. They will be the economies that can convert those budgets into productive assets, transferable technology, skilled employment, competitive local companies, and industrial capabilities that continue generating value long after individual defense contracts have been completed.