DUBAI (Middle East Eye) – The United States needs to push for greater transparency within the United Arab Emirates’ military sector, with experts saying collaborations with Abu Dhabi have created the potential for massive levels of corruption.
The UAE enjoys a close strategic and security partnership with the U.S., and it hosts numerous international conglomerates, development funds and investment firms.
Michael Picard, a research fellow at Transparency International Defence & Security, said the Emirati military industry was “very dynamic, largely because of the knowledge, the connections, the expertise of American defense entrepreneurs and contractors”.
In 2020, the Pentagon assessed that the UAE was financing the Wagner private military contractor’s operations in Libya in support of renegade general Khalifa Haftar. Abu Dhabi has denied ever supporting the Wagner Group.
“These obscure connections can expose the U.S., they can empower kleptocrats and of course, they undermine international security. So this is really where we think the U.S. should be pushing for greater transparency,” Picard said during a webinar on corruption in the arms industry on Thursday.
Last month, the UAE was placed on the Financial Action Task Force’s “gray list”, meaning it would be under increased monitoring due to “strategic deficiencies” in their efforts to counter money-laundering.
A 2018 report by the Washington-based Center for Advanced Defense Studies also found that war financiers, drug traffickers, and other illicit actors sanctioned by the U.S. had used the country’s real estate market with lax regulations and high value properties to launder their money.
One of the main ways to create increased transparency in U.S. arms sales is to end the use of indirect offsets.
Offsets are compensation practices that foreign governments require U.S. firms to enter into in some weapons deals, and can include “sweeteners” such as co-production, technology transfers, or investment in the purchasing country.
Jodi Vitari, co-chair of the Global Politics and Security program at Georgetown University, said while offsets themselves were not a problem, indirect offsets - compensations that are kept secret by purchasing countries - pose huge issues for transparency.
“These contracts can be secret - matter of fact, revealing information about these contracts in places like the United Arab Emirates, those are considered state secrets,” Vittori said on Thursday’s panel.
“This is a possibility for corruption, for patronage, for kickbacks. There’s all sorts of possibilities there. And there’s no real way to watch these offset contracts in many countries because they do make it illegal to provide any information about them.”
Vittori said that the indirect offsets for weapons procurement could range from 30 to 60 percent of the deal, and also do not have to be linked at all to the contract.
“That’s a massive amount of money in large secret contracts for large, often secret procurements.”
These secret military contracts have been shown to be rife with corruption, as reported in the Financial Times when Saudi Arabia used a contract with Raytheon to set up a shrimp farm in the country, while the UAE bought 10,000 European petrol stations and five refineries with the help of multiple military companies.