The United States is expected to sign a deal in mid-2011 to sell the UAE an estimated $7bn missile defense system from Lockheed Martin.

The UAE is interested in the system, called Theater High Altitude Area Defense (THADD), to use against possible ballistic missile attacks.

If the deal goes ahead, it would be the first overseas sale of the system and could be worth up to $7bn. US-based Lockheed Martin expects the negotiations to end in the first half of 2011.

The Middle East region is expected to increase its government spending on defence and is likely to spend up to $100bn on defence and aviation by 2014 as political tensions rise.

The market is forecast to grow 11 per cent over five years. In 2009, the Middle East spent $90bn on defence, which was about six per cent of the global spend.

Saudi Arabia is also increasing its defence capability and has sent a letter of request to the US government for the purchase of Boeing F-15s aeroplanes and AH-64 helicopters. The kingdom is also interested in acquiring 72 UH-60 Black Hawk helicopters, missile-defence systems and other additional equipment from Boeing (MEED 1:8:10).