Border disputes with Morocco are expected to influence Spanish defence expenditure

Thursday 19 January 2012, Amsterdam

Spanish military expenditure grew at a CAGR of 3.07% during the review period. However, due to financial constraints caused by the global economic crisis, the nation’s military expenditure is expected to register a more moderate CAGR of 2.81% during the forecast period. Despite cuts to the Spanish defence budget, Spanish defence expenditure is expected to be supported by security threats, international missions and the country’s strained relationship with Morocco during the forecast period.

Compared to the leading global defence spenders, the defence expenditure of Spain is moderate. Furthermore, cuts to the defence budget due to financial constraints are a concern for foreign defence firms during the forecast period.

Spain has a strained relationship with Morocco as the two countries are involved in a territorial dispute over the Spanish-controlled islands Ceuta and Melilla, which lie in Moroccan territory. During the forecast period, border disputes with Morocco are expected to influence Spanish defence expenditure.

Spain has a well-developed domestic defense industry capable of fulfilling the majority of the nation’s military requirements. Over the past decade, the country has worked towards enhancing its defense industrial base, due to which it’s naval and aerospace defense sectors have become highly competitive. However, Spain continues to depend on imports for its land-based defense systems.

During the forecast period, key investment opportunities are expected to emerge in the maritime security and aviation security markets, and equipment catering to critical infrastructure protection. During the forecast period, the nation is expected to procure equipment catering to border security, increased freight control and access control. Spain has an active illegal drug trade. In 2010, the total value of drug trafficking in the country was estimated at US$90 billion, making it one of the largest markets in Europe. To control the smuggling of drugs, the Spanish government is expected to procure explosive detection systems (EDS), which include trace chemical detectors (TCD) capable of tracing drug residue and machines capable of screening by using X-rays or millimetric wave imaging.