Iran Defence and Security Report 2015
BMI View: We expect Iran to reach a nuclear deal with the P5+1 powers in 2015, leading to a lifting ofsanctions over coming quarters. This will facilitate a return to economic growth; however, progress willslow, and Tehran's military spending will therefore remain modest on a regional comparison in the shortterm.
That said, demand for defence equipment will be strong, as Iran continues to provide assistance toShi'a groups across the region; seeks to narrow the gap to rival Saudi Arabia's more technologicallyadvanced military; and invests in weapons systems to protect against a potential US/Israeli attack.
Meanwhile, the government remains committed to achieving its goal of military self-sufficiency. Iran has alarge number of domestic defence companies, capable of manufacturing products such as small arms, tanks,missiles and military electronics. The lifting of sanctions will eventually enable sector exports, creatingtrade opportunities for local manufacturers, and allowing these to partner with foreign firms to benefit fromtechnology transfer.
In 2015 we expect Iran to reach a deal with the P5+1 powers over its nuclear programme. This will lead to agradual lifting of sanctions, which in turn will bring the Iranian economy back to growth. That said,recovery will take time, as the country struggles to overcome logistical and bureaucratic issues associatedwith years of underinvestment and as the key oil sector is not expected to be able to spur a significant uptickin exports until 2016 at the very earliest. In 2015, therefore, we expect Iran's defence spending to remainmodest on a regional comparison, reaching USD9.8bn. This represents a 21.1% year-on-year (y-o-y)increase, which may seem significant; however, it can be explained by a rise in IRR value when markedagainst USD. Demand for military equipment in Iran will continue to be driven by the real or perceivedthreat of a US/Israeli attack on its nuclear facilities; the maintenance of a large ground force to make up fora lack of advanced military equipment; the continued assistance provided to Shi'a militants operating acrossthe Middle East as well as efforts to maintain social and political stability at home.
Learn how to effectively navigate the market research process to help guide your organization on the journey to success.Download eBook