During the 1980s, Saudi Arabia's outlays on national security were among the highest in the world in spite of its relatively small population. In 1989 its expenditures of US$14.7 billion ranked eleventh among countries of the world. Nonetheless, this level of spending reflected a declining trend from a peak of US$24.8 billion reached in 1983. Budgeted defense expenditures maintained this gradual decline between 1988 and 1990. Actual defense expenditures rose dramatically in 1990, however, to almost US$31.9 billion to meet the costs of additional arms and the contributions to United States and British military expenditures necessitated by the Iraqi aggression against Kuwait. The defense budget of US$26.8 billion in 1991 included more than US$13.7 billion in contributions to the United States, French, and British war efforts, but did not include projected heavy additional arms purchases. Saudi Arabia also contributed to the costs of other non-Western members of the coalition forces acing Iraq.

In early 1991, Saudi officials estimated that during the first five months of the gulf crisis the country had earned roughly US$15 billion in windfall oil profits arising from increased production and higher market prices, while assuming an additional US$30 billion in commitments related to the crisis. The latter figure included US$13.6 billion in new arms and equipment, US$2.7 billion in extra mobilization and deployment costs and civil defense, with the remainder consisting of grants and loans to other governments to offset the economic effects of the crisis.

During 1983, when defense spending reached a peak, military expenditures per capita were at an annual level of nearly US$2,500. This amount was more than twice the per capita defense spending in the United States, and was not approached by any other country except Israel, Iraq, and the other oil-exporting states of the Persian Gulf. As a consequence of the reduced rate of defense spending after 1983, military expenditures per capita had declined to US$897 by 1989.

The share of gross national product (GNP--see Glossary) originally earmarked for defense in 1990 was 16.9 percent, materially below the peak of 22 percent reached in 1983 but still about twice as high as the Middle East as a whole. Defense outlays constituted 35.5 percent of central government expenditures in 1989, which was also higher than the Middle East average of 32 percent.

The declining rate of defense spending between 1984 and 1990 resulted largely from reductions in oil revenues that produced a negative growth rate for the entire economy. A secondary factor may have been the completion of several large-scale infrastructure projects. Arms imports, which accounted for 16 percent of the defense budget in 1983, had risen to 25 percent by 1988. The major contracts for weaponry placed with Britain, the United States, and France since 1988, the extraordinary expenses of the Persian Gulf War, and plans for expansion of the armed forces during the 1990s seemed certain to impose pressure on the defense149 se budget for years to come.

Data as of December 1992