Abu Dhabi Weighs Creation of New Entity to Advance Global Defence Interests

Abu Dhabi Pursues New Defense-Focused Investment Vehicle

Officials in Abu Dhabi have held preliminary talks on creating a new defense-focused investment vehicle, as part of the United Arab Emirates' push to further bolster its defense capabilities in the wake of regional conflicts.

The move aims to centralize efforts to build stakes in global defense manufacturers and expand domestic production. The talks have involved top officials and executives in Abu Dhabi, including Crown Prince Sheikh Khaled bin Mohammed Al Nahyan and Mubadala Investment Co. Chief Executive Officer Khaldoon Al Mubarak.

The new vehicle is likely to be mandated with taking stakes in defense companies worldwide to diversify supplies for the UAE. Investments could span established firms in Europe and the US, Ukrainian and Turkish drone manufacturers, as well as venture-style bets on niche technologies.

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With wealth funds that control close to $2 trillion, Abu Dhabi ranks among the world's wealthiest cities — and one that's already known for splashing billions of dollars into sectors ranging from finance to artificial intelligence. The emirate's latest push could add a deep-pocketed buyer to the defense sector where firms are already benefiting from increased spending around the world.

Deliberations on the structure and strategy of the new Abu Dhabi initiative remain at an early stage, and the entity may ultimately not materialize. Representatives for the Ministry of Foreign Affairs, the Executive Affairs Authority, and the Abu Dhabi Media Office did not respond to requests for comment. Mubadala declined to comment.

UAE's Growing Defense Capabilities

The UAE has been bolstering its defense capabilities in recent years, driven by regional conflicts and a desire to reduce reliance on foreign equipment. In 2019, Abu Dhabi created EDGE Group PJSC by consolidating more than 25 entities and turned it into the nation's largest weapons manufacturer, with annual revenue of around $5 billion.

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In November, EDGE said it would invest $200 million in a drone joint venture with US-based Anduril Industries Inc. and prioritize the development of air-defense systems. Its Chairman Faisal Al Bannai recently traveled to the US and held meetings with, among others, President Donald Trump and the co-founders of venture firm Andreessen Horowitz.

Defense Spending and Investments

The UAE is already a major arms buyer, accounting for 2.7% of global imports between 2021 and 2025, according to a March report by the Stockholm International Peace Research Institute. It has built an advanced arsenal including Patriot and THAAD missile systems, F-16 fighter jets, and Black Hawk helicopters, with the US, France, and South Korea among its main suppliers.

In March, Washington fast-tracked the sales of up to $16.5 billion of air-defense systems, radars, and missiles to Middle Eastern allies, including the UAE and Kuwait. Ukraine has also struck defense agreements with some Gulf states, drawing on anti-drone capabilities honed over four years of countering Russian attacks.

Comparison of Abu Dhabi's Defense Investments

Note: The data is based on a March report by the Stockholm International Peace Research Institute.

The UAE's push to build up its domestic defense industry and reduce reliance on foreign equipment is part of its broader strategy to assert its ambitions and forge its own political and security alliances. The discussions in Abu Dhabi also come against the backdrop of multiple regional conflicts over the last several years.

Regional Conflicts and Defense Spending

The Iran war highlighted the UAE's vulnerability to drone attacks, with thousands of drones and missiles targeting the country over many weeks. Tehran targeted the UAE more than any other country in its retaliation for the conflict started by the US and Israel, though the vast majority of the projectiles were intercepted by a multi-layered air defense system.

In rare public remarks early in the war, UAE President Sheikh Mohammed bin Zayed Al Nahyan said, "reinforcing our defense capabilities will remain a central strategic priority." He warned against mistaking the country's prosperity for weakness, saying, "the UAE has thick skin and bitter flesh, we are no easy prey."

The addition of a defense-focused behemoth will add to the city's investing prowess. Discussions have centered around keeping the vehicle outside the orbit of Abu Dhabi's sovereign wealth funds and existing defense firms, the people said. The emirate has created similar sector-specific platforms in the past, including MGX for artificial intelligence and Judan, a $237 billion financial-services holding company.