Will the Middle East Go for an Even Bigger "Umbrella" After Cheongung II? [Weekend Money]

Preliminary Air Defense Agreement Between Hanwha and UAE
Prospects Rise for Additional Orders and First L-SAM Export

Cheongung II Firing Scene

Will yet another layer of Korean-made "umbrella" soon cover Middle Eastern skies? The United Arab Emirates (UAE), which previously purchased the Cheongung II missile system, is now discussing a tighter air defense network with Korea. Market attention is focused on the next order from this repeat customer, as the UAE is reportedly considering both additional purchases and more advanced defense systems from Korea.

On September 15 (local time), Hanwha Systems announced on September 17 that it had signed a key term sheet with the UAE's state-run defense company EDGE Group for building an integrated air defense network. The plan covers a broad scope, from long- and medium-range missile defense to drone countermeasures. The discussions also include the possibility of establishing a local joint venture and production plans.

An air defense network is not a single umbrella that blocks all threats. Instead, multiple layers of defense systems are assigned to different types and distances of incoming threats. This latest cooperation includes provisions for the additional introduction of the medium-range surface-to-air missile Cheongung II, as well as content related to the long-range surface-to-air missile system L-SAM. The direction is to reinforce the current defense network and expand the means to counter growing threats.

The UAE became a customer when it ordered Cheongung II in 2022. If it adds equipment compatible with its existing weapons, it can leverage operational experience and established systems. Just as people often opt for a familiar operating system when upgrading their smartphone, existing defense customers tend to maintain relationships with their current suppliers—this is considered a key factor in defense deals.

If this relationship continues, the scope for Korean exports may broaden. Beyond simply increasing the quantity of the same equipment, the UAE could accompany this with the introduction of higher-tier defense systems. Jaeho Seo, a researcher at DB Financial Investment, explained, "In Saudi Arabia and Iraq, which have also ordered Cheongung II, there is a possibility of additional orders or expansion contracts based on their previous procurement history."

Another major product is the L-SAM. If this new partnership materializes into an actual contract, it will mark the first export case for the system. Securing international clients in the early stages of domestic mass production and deployment would provide a valuable track record when proposing the system to other countries.

The urgent need to bolster air defense networks in various countries is expected to underpin continued demand. Seo further analyzed, "In the Middle East and Europe, the need to respond not only to missiles but also to attack drones is increasing. The time required to replenish inventories for American interceptor missiles could create more export opportunities for Korean-guided weapons."

This content was produced with the assistance of AI translation services.