Iraq Defence and Security Report 2017
Iraqi defence expenditure will increase substantially over the coming decade, amid Baghdad'sefforts to counter terrorism, reduce levels of violence and unrest, and regain control of borders andairspace. The country's armed forces are in need of a range of equipment - particularly in the ground andaerospace segments; however, operational expenses will continue to take up a large share of the overalldefence budget, limiting funds available for new procurement. Nevertheless, Baghdad will likely be able topurchase urgently needed equipment with military aid or flexible payment arrangements offered by itsstrategic allies. Iraq remains wholly reliant on foreign suppliers to meet its armed forces' requirementsgiven the complete lack of a domestic defence industry - a situation which we do not expect to change overthe next decade.
Defence Industry Risk Reward Index
The security environment in Iraq is extremely fragile. High levels of terrorism, violence, crime and politicalinstability have created a strong demand for military equipment - which will persist over the long term.
However, the defence budget is subject to financial constraints, and a large share of military spending willbe allocated towards operational expenses associated with the IS campaign, limiting funds available for newprocurement over the next few years. Meanwhile, elevated security risks, along with widespread corruptionand low levels of economic and investment openness make the establishment of in-country defencemanufacturing facilities an extremely high-risk venture at present. Consequently, Iraq places 10th in ourDefence Industry Risk Reward Index for the Middle East and Africa, with an overall score of 44.5 out of100.
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