The Military Evolution of Uninhabited Aerial Systems (UAS) – The Future of the Global UAS Market

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Uninhabited Aerial Systems (UAS), often referred to as drones, have come a long way since their inception in the 20th century. Initially, UAS were primarily used for non-kinetic missions, such as target practice and decoys. However, their role evolved over the years, and they have become indispensable tools in modern warfare.

This article delves into the historical development and strategic significance of UAS, their advantages over inhabited aircraft, and the shifting global landscape of military UAS usage.

Early Uses of UAS

The early history of UAS dates back to the 1930s, when they were mainly employed as practice targets and decoys. These early UAS served as tools to train military personnel in anti-aircraft and air defense tactics. However, as technology advanced, so did the capabilities of UAS.

Introduction of Reconnaissance Capabilities

The late 1950s marked a turning point in the use of UAS when they began to be employed for reconnaissance purposes. This transformation was most notable during the Vietnam War, where the Lightning Bug UAS conducted a staggering 3,425 intelligence, surveillance, and reconnaissance (ISR) operations. These UAS played a critical role in gathering vital information for military operations.

International Pioneers in UAS Development

The innovation in UAS technology was not limited to the United States. Israel emerged as a pioneer in UAS development during the Cold War era and remains a leading exporter of UAS to this day. For example, in the 1983 Operation Peace for Galilee, Israel effectively utilized signal-emitting UAS to deceive Syrian radar operators into expending missiles on decoys. This demonstrated the strategic value of UAS in warfare.

Integration of UAS with Precision Guided Munitions

The Gulf War in the early 1990s marked a significant milestone in the evolution of UAS. They became increasingly integrated with precision-guided munitions, proving to be critical for tactical-level intelligence collection, battlefield damage assessment, and target validation. The UAS demonstrated their value in modern conflict scenarios.

Adapting to Asymmetric Challenges

With the dissolution of the Soviet Union in 1991, the strategic rationale for U.S. employment of UAS evolved again. The focus shifted towards addressing smaller asymmetric challenges. Humanitarian interventions, like those in the former Yugoslavia, prompted the development of long-endurance UAS, such as the Predator. These platforms allowed for sustained surveillance and intelligence gathering.

Advantages of UAS

Uninhabited Aerial Systems offer several advantages over manned aircraft, making them an attractive choice for various military missions. These advantages include:

  • Reduced Risk to Operators: UAS eliminate the risk to human operators’ lives. This not only enhances the safety of military personnel but also allows for operations that domestic audiences might be unwilling to support if human lives were at stake.
  • Lower Operational Costs: UAS generally have lower personnel and operating costs per hour of operation compared to manned aircraft. This cost-effectiveness makes them an efficient choice for certain missions.
  • Overcoming Human Limitations: UAS are not constrained by limitations that affect human-piloted aircraft, such as endurance caps, safety requirements tailored to human operators, and the physical limitations of the human body.

Shifting Strategic Focus and Technological Advances

The Obama administration’s National Military Strategy in June 2015 redirected the nation’s strategic focus towards great power competition, with a specific emphasis on China. This shift necessitated a new strategic concept for UAS. The rapid technological developments and classified approaches in this field make it challenging to summarize this concept comprehensively.

However, the Unmanned Systems Integrated Roadmap emphasized themes like interoperability, autonomy, network security, and human-machine collaboration. Some analysts have even forecasted the pivotal role of UAS in future great power conflicts, often citing emerging technologies like swarming maneuvers as potential game-changers.

Global Proliferation and Implications of UAS

The use of UAS in conflict is no longer confined to great powers like the United States or innovative nations like Israel. Even unarmed UAS used for intelligence, surveillance, and reconnaissance purposes can lower the threshold for entry into conflict. The United Nations Office for Disarmament Affairs has identified several implications of armed UAS, including altering the incentives for the use of force, tempting states to reinterpret legal frameworks to exploit the capabilities of armed UAS, and increasing the use of such systems by non-state armed groups or even individuals.

Growing International Demand

The operational utility of UAS has driven increased demand across the globe. Stockholm International Peace Research Institute (SIPRI) data reflects a nearly 60% increase in UAS deliveries internationally and a staggering 577% rise in loitering munition deliveries between the first and second decades of the 21st century.

Affordability is a key feature of many UAS, with the unclassified military UAS market estimated to grow to $13.2 billion by FY 2032. This represents a 41% increase over FY 2023 spending, highlighting the expanding market for UAS technologies.

Global UAS Industrial Base and Regulatory Regimes

Understanding the global UAS industrial base, the international arms trade, and relevant regulatory regimes is crucial to comprehending how UAS will shape future conflicts. The UAS market is increasingly global, with various countries specializing in different market niches. The United States, for example, plays a significant role in UAS research and development spending.

Key Concepts

In the realm of uninhabited systems used for warfighting, there exist several distinct categories, each tailored to specific operational requirements. This chapter delves into the key concepts that differentiate these categories, focusing on unmanned aerial systems (UAS), armed UAS, and loitering munitions.

Traditional Missiles

Traditional missiles are a well-established class of long-range, high-speed munitions designed to deliver kinetic effects to a target. They are typically fire-and-forget weapons, meaning they do not require continuous guidance after launch. Missiles play a vital role in modern warfare, providing a means to strike targets from a distance with precision.

Uninhabited Aerial Systems (UAS)

UAS, also known as drones, encompass a diverse range of missions, from intelligence, surveillance, and reconnaissance (ISR) to deploying various mission packages, including electronic warfare capabilities. UAS can carry and launch their own munitions, extending their utility beyond surveillance and data collection. These systems are often remotely piloted, and if they survive the mission, they can be recovered upon its completion. Unlike missiles, UAS are not inherently attritable, making them an attractive option for missions where preserving the platform is advantageous.

Loitering Munitions

Loitering munitions represent a hybrid category that combines features of both UAS and traditional missiles. Like UAS, they can navigate to a target area and remain airborne until a decision is made to employ them. However, like traditional missiles, they are designed with kinetic warfighting effects in mind and are not intended to be reused after striking a target. In fact, many loitering munitions may not even be recoverable if they fail to locate a target. Therefore, attritability is assumed for both missiles and loitering munitions.

Analyzing the Categories

This report primarily focuses on the latter two categories, UAS and loitering munitions, due to their distinct employment concepts and capabilities. To better understand these categories, we will break them down into three broad groups:

Unarmed UAS: Unarmed UAS participate in what is known as a “long kill chain.” In this context, the term “long kill chain” implies that to achieve kinetic effects, targeting data must be relayed to another system, typically a command post, which then coordinates and executes the kinetic action. Unarmed UAS are versatile platforms, characterized by their simplicity, and they form the largest portfolio of UAS. While they require a more extensive organizational capacity to translate data into operational effects, their straightforward design makes them widely prevalent and less of a proliferation risk.

Armed UAS: Armed UAS are designed for a “short kill chain.” These systems have the capability to deliver kinetic effects directly through weapon systems mounted on the airframe. This streamlined approach reduces the complexity of the kill chain, enabling operators to surveil and engage a target from a single platform. However, armed UAS are typically larger and come with substantial acquisition and sustainment costs compared to other UAS. The higher price tag often corresponds to additional capabilities, such as extended endurance, and the capacity to support long kill chains in addition to their direct attack capabilities.

Loitering Munitions: Loitering munitions represent a unique category with self-contained kill chains. These systems integrate a warhead into the airframe and can conduct surveillance of a target area before striking it. From a proliferation perspective, the distinction between a self-contained kill chain UAS and a traditional missile can, at times, be blurred. This is because loitering munitions are designed to deliver kinetic effects, similar to missiles, but possess the versatility and reconnaissance capabilities found in UAS.

Table 1. UAS and Loitering Munition Operating Concepts4

CategoryConceptOperational ComplexityCommon UsesExamples
Unarmed UASLong kill chainHighArtillery spotting, battlefield surveillanceDJI Drones, Global Hawk, PD-2
Armed UASShort kill chain and long kill chainModerateAs above, as well as tracking and destroying targets needing long-term monitoringReaper, TB2
Loitering MunitionSelf-contained kill chainLowSuppression of enemy air defenses, precision strikes requiring target verificationSwitchblade, Harop

U.S. Contracting for Uninhabited Aerial Systems (UAS)

In this chapter, we delve into the intricacies of U.S. government contracting for Uninhabited Aerial Systems (UAS). The primary source of information for this analysis is the Federal Procurement Data System (FPDS), which captures both civil and defense government contract transactions. It’s important to note that classified contracts are not required to be reported in the FPDS, and certain emerging systems may not be included in the data. This chapter provides a comprehensive overview of U.S. UAS contracting, including trends in spending, the distribution of contract obligations, and the role of research and development.

Data Sources and Limitations

The FPDS provides a foundation for tracking UAS spending with a specific code for “complete unmanned aircraft systems and subordinate air vehicles.” However, the study team expanded this tracking to provide a more comprehensive analysis of UAS contracts. It’s essential to acknowledge that the FPDS only includes prime contractors and does not cover classified contracts. As a result, emerging systems like the Phoenix Ghost and speculated projects like the stealthy RQ-180 may not be included in the data. Intelligence agencies, while influential in UAS development and use, do not report into the FPDS.

To enhance the dataset, CSIS conducted an extensive search through the major defense acquisition programs labeled within the FPDS to identify those that qualify as UAS. Additionally, the study team expanded the dataset by examining transaction descriptions from FY 2010 through FY 2021 associated with $10 million or more in then-year obligations. This effort addressed a challenge in analyzing UAS within the FPDS, where there is only a single product or service code covering uninhabited vehicles. Therefore, this dataset includes contracts that meet any of the following criteria: using the UAS product code, being tied to a UAS major defense acquisition program, or explicitly mentioning UAS projects in the contract description.

Trends in UAS Contracting

Total UAS contract spending across all five U.S. Department of Defense (DoD) and civilian customers has shown fluctuations over the years. Unclassified UAS spending reached a peak at $5.3 billion in FY 2019 before experiencing a decline to $4.1 billion in FY 2020 and $3.0 billion in FY 2021. This trajectory aligns with the Teal Group’s estimate that the unclassified budget for military UAS research, development, testing, evaluation, and procurement spending in FY 2023 is $5.4 billion.

Spending trends vary across military departments, with the Army having the highest levels of spending before the FY 2013 budget caps. The Army’s spending is primarily driven by Tactical UAVs, including platforms such as the RQ-7 Shadow and the MQ-1C Gray Eagle. The Air Force has maintained steady contract obligations since FY 2014, leveling off at $1.5 billion per year, slightly above the starting point in FY 2010. Notably, the Air Force is planning the retirement of systems that have received the majority of its funding, the RQ-4 Global Hawk and MQ-9 Reaper.

The Navy has consistently invested in Broad Area Maritime Surveillance, which evolved into the MQ-4C Triton, an upgraded RQ-4 Global Hawk. The drop in Navy spending is partly due to varying annual obligations for the MQ-25 Stingray, which remains categorized as an R&D project with aerial refueling as a central mission.

Civilian agency spending on UAS contracts peaked at $222 million in FY 2020, declining to $163 million in FY 2021. Despite the drop, FY 2021 still marked the third-highest year in the last decade for civilian spending on UAS contracts.

Distribution of UAS Contract Obligations

The majority of UAS contract obligations, 69% over the reporting period, are directed toward products. Within this category, there has been a substantial decline in spending, with a significant drop from $3.44 billion in FY 2019 to $1.95 billion in FY 2020 and $1.55 billion in FY 2021.

What sets UAS contracting apart is the proportion allocated to Research and Development (R&D). Over the reporting period, 11% of UAS obligations were directed to R&D, ranging from 6% to 17%. This rate exceeds that of several other defense system portfolios, including aircraft, ships, and land vehicles. Despite a drop from $0.6 billion in FY 2020, the highest level since FY 2012, to $0.18 billion in FY 2021, the R&D investments highlight the continuous drive for innovation in UAS.

UAS Contracting for Services

A review of major service UAS contracts reveals a focus on contractor logistic support to maintain these systems in operational states. Approximately 20% of UAS contracting is allocated to services, making it the highest among vehicular categories, just behind the aircraft sector. Spending on UAS services decreased from $1.41 billion in FY 2020 to $1.17 billion in FY 2021 but remained significantly higher than the years from FY 2010 to FY 2016, where annual spending averaged below $0.5 billion.

In summary, this chapter provides an in-depth analysis of U.S. government contracting for Uninhabited Aerial Systems, emphasizing the importance of UAS in military and civilian applications. The data reveals significant fluctuations in contract spending, with a notable focus on research and development efforts, highlighting the continuous drive for innovation and adaptation in this dynamic field.

Figure 2. Defense System Platform Contract Obligations and Share of Obligations by Product, R&D, and Service, FY 2010–FY 2021(FPDS, n.d.; CSIS, n.d.)

Federal Acquisition and the Commercial Uninhabited Aerial Systems (UAS) Market

The interaction between federal acquisition practices and the burgeoning commercial UAS market is a vital aspect of the evolving landscape of UAS technology. This chapter explores how the federal acquisition system interacts with commercial UAS technology, and how the government utilizes commercial contracting authorities to tap into this dynamic sector.

The Commercial UAS Market

The Teal Group’s estimations reveal that the total value of civil UAS reached approximately $7.2 billion in 2022. While this figure is smaller than the value of military UAS, it underscores the significant impact of the commercial UAS market on the UAS landscape. This commercial sector plays a pivotal role in driving innovation and technological advancements in UAS.

In commercial-adjacent sectors, such as the UAS industrial base, many technological innovations are not government-funded but are developed and marketed for a broader customer base. The federal acquisition system recognizes the potential of tapping into this commercial market to benefit from technology investments that were not originally intended for government purposes.

Commercial Contracting Authorities

Federal acquisition practices encompass a range of tools designed to access commercially available products and services. This approach, referred to as commercial contracting, is specifically oriented toward acquiring goods and services from the commercial market. The primary objective is to leverage the discipline of the commercial market and harness the technological advancements that have been funded by private sector investments.

The Role of Commercial Contracting in the UAS Market

Figure 3 illustrates the extent to which commercial contracting authorities are used within the UAS market. This approach represents only a fraction of the billions of dollars spent on UAS each year, with the bulk of UAS procurement following more traditional acquisition pathways. While there has been a gradual increase in the use of commercial contracting for UAS procurement, it remains relatively modest in scale.

For the Army, Air Force, and civilian agencies, there has been a notable uptick in the utilization of commercial contracting authorities. However, it’s important to emphasize that the adoption of these approaches is still in its early stages and often underreported.

Over the past four years, an average of approximately 5% of federal contract dollars for UAS have been awarded through commercial contracting. This percentage, while relatively low, surpasses the utilization of commercial contracting approaches in certain other defense-focused sectors, such as ordnance and missiles or air and missile defense.

However, the rate of commercial contracting for UAS remains lower when compared to other areas of defense acquisition, including aircraft, space systems, ships and submarines, and land vehicles. These sectors have historically embraced commercial contracting to a more significant extent, with percentages ranging from 7% to 26%.

Figure 3. Federal Obligations for UAS Using Any Commercial Authorities, FY 2011–FY 2021 (FPDS, n.d.; CSIS, n.d.)

Structure of the U.S. Uninhabited Aerial Systems (UAS) Industrial Base

Understanding the structure of the U.S. UAS industrial base is critical in grasping the dynamics of this specialized sector within the broader defense industry. This chapter provides insights into the composition of the U.S. UAS industrial base, including trends in consolidation, the participation of various vendors, market share analysis, and the prominent players in the field.

Size and Significance of the UAS Industrial Base

The UAS industrial base, as a distinct niche within the U.S. defense industrial base, is notably smaller when compared to other sectors. Over the reporting period, the inhabited aircraft sector is more than 20 times larger than the UAS sector, and the ordnance and missiles sector is over five times larger. This discrepancy in size also reflects the challenges in capturing data related to UAS, particularly as the government contracts for engines, electronic systems, and warheads for these platforms.

Despite these challenges, the data reveals two key trends in the UAS industrial base, illustrated in Figure 4.

Figure 4. Count and Contract Obligations to Federal UAS Vendor by Size, FY 2010–FY 2021 (FPDS, n.d.; CSIS, n.d.)

Consolidation and Vendor Count

First, when measured by obligations, the UAS sector is experiencing consolidation. This consolidation is a result of merger and acquisition activities within the UAS industry and the conclusion of production for some UAS programs without subsequent follow-on contracts for the vendors involved.

Second, when examining the count of vendors, the UAS industrial base displays a wider range of participants, even if their individual revenues are modest. The number of UAS vendors has generally increased since FY 2014, even during periods when the larger U.S. defense industrial base showed stability or decline. For example, in FY 2020, the number of defense vendors across all sectors decreased by 10%, while the number of UAS vendors increased.

Market Share and Key Players

Market share analysis within the UAS industrial base reveals the significant presence of a select group of contractors. Referred to as the “Big Five,” Lockheed Martin, Northrup Grumman, Boeing, Raytheon, and General Dynamics collectively held 40.5% of the UAS market during the reporting period. This market share remained relatively consistent even as total obligations declined from $2.0 billion in FY 2019 to $1.1 billion in FY 2021.

General Atomics, a midsized specialist, secured a slightly smaller 40.0% share of the market. Although their share remained consistent, their obligations decreased from $2.7 billion in FY 2019 to $1.4 billion in FY 2021.

Large entities, categorized as those vendors with $3 billion or more in revenue, have witnessed a gradual decrease in market share. Their obligations decreased from $344 million in FY 2019 to $35 million in FY 2021.

In contrast, the growth in vendor count has been notable among medium and small vendors. Over the past decade, the number of small and medium vendors increased from 60 in FY 2011 to 75 in FY 2016, and 104 in FY 2021. However, the collective share of these vendors in the market remains comparatively small, reaching $376 million in FY 2021, which is an increase from a low of $127 million in FY 2016.

Table 2. Top 10 U.S. Federal Prime UAS Vendors for Contracts, FY 2010–FY 2021

Prominent Contractors

Table 2 provides an overview of the individual contractors that received the highest share of defense obligations for UAS. General Atomics and Northrop Grumman are the two largest providers of UAS during the reporting period, with obligations of $19.5 billion and $13.6 billion, respectively. Northrop Grumman held the lead in FY 2010 and FY 2011, while General Atomics took the lead thereafter.

Additionally, three other members of the Big Five defense contractors—Raytheon, Boeing, and Lockheed Martin—rank in the top positions. Lockheed Martin, the largest overall defense contractor, is also the second-largest provider of civilian UAS.

Several other companies in the medium and small tiers have experienced relative decline, except for AeroVironment, which played a role in transferring multiple systems to Ukraine via drawdowns. Kratos Defense & Security is another notable example of consolidation within this sector, as it acquired the 10th-ranked Composite Engineering.

In conclusion, the U.S. UAS industrial base is marked by consolidation in terms of obligations, with fewer large entities dominating the sector. However, the vendor count has increased, with medium and small vendors playing a more prominent role. The presence of the “Big Five” defense contractors underscores the significance of these major players in shaping the UAS landscape and serving as key providers of UAS technology and solutions.

Arms Control Agreements and Regulations in the UAS Industry

This chapter offers an in-depth exploration of the intricate arms control agreements and regulatory framework governing the U.S. Uninhabited Aerial Systems (UAS) industry. While the central focus of this report revolves around the UAS industry’s advantages, it is imperative to comprehend the various regulations and international agreements affecting these systems, particularly with respect to their capabilities, exportation, and compliance with global agreements.

Regulatory Framework

The regulatory framework surrounding U.S. export controls and arms regulations is built upon domestic laws, most notably the Arms Export Control Act of 1976. The enforcement of these laws is vested in the executive branch, with several federal departments, including the Departments of State, Defense, and Commerce, playing pivotal roles in regulating arms and dual-use exports.

Within the U.S. export control system, various international agreements contribute to the arms regulation landscape. These agreements include the Wassenaar Arrangement, but one of the most influential for UAS is the Missile Technology Control Regime (MTCR).

Missile Technology Control Regime (MTCR)

Established in 1987 by the G7 states, the MTCR originally sought to combat the sale of nuclear-capable missiles by the Soviet Union and China. Although UAS were not initially the focus of this agreement, the MTCR underwent expansion in 1992 to encompass UAS, using categorization based on speed and payload capacity as criteria for more stringent regulation.

Presently, the MTCR boasts 35 member states and is designed to establish internationally recognized rules and norms for controlling missile-related capabilities.

It classifies missile capabilities into two primary categories:

  • Category I: Encompasses complete rocket and unmanned aerial vehicle systems with the capability to deliver a 500-kg warhead to a range of 300 km.
  • Category II: Comprises dual-use items, less-sensitive components, and other complete missile systems capable of a range of at least 300 km.

For Category I items, there is a “strong presumption of denial” for export under MTCR guidelines. In contrast, Category II items are subject to less restrictive export regulations. The MTCR, although not binding as an international agreement, is often incorporated into the national laws of its member countries.

3. Changing Perspectives on UAS within the MTCR

The inclusion of UAS as Category I systems has posed significant challenges to the widespread export of such systems. In June 2020, the United States reinterpreted the MTCR to move UAS with an airspeed of less than 800 km/h into Category II. This change aimed to expand export opportunities and potentially make the regime more appealing to additional MTCR signatories.

However, critics argue that such changes, particularly those made on a non-consensus basis, carry the risk of undermining established international norms and standards. This could potentially lead to other countries unilaterally reinterpreting international regimes.

As of August 2022, key regulatory documents, including the Department of State’s MTCR Fact Sheet and International Traffic in Arms Regulations (ITAR), had not been fully updated to reflect these changes.

Control Mechanisms and Export Policies

The regulation of UAS exports is influenced by various policies and agreements. This includes the 2013 Arms Trade Treaty (ATT), which implicitly applies to drones, especially those with strike capabilities. The United States and Ukraine have signed but not ratified the ATT, while Armenia, Azerbaijan, and Russia have neither signed nor ratified it.

The 2015 U.S. Export Policy for Military Unmanned Aerial Systems emphasizes principles of evaluation based on factors such as humanitarian law, compliance with international law, the lawful use of force, proper training, and the avoidance of unlawful surveillance or use of force.

In 2016, the Joint Declaration for the Export and Subsequent Use of Armed or Strike-Enabled Unmanned Aerial Vehicles (UAVs) was introduced, drawing a distinction between strike and non-strike UAS based on their capabilities. The 2019 export policy further emphasized increasing trade opportunities for U.S. companies.

The Global UAS Export Landscape

The global UAS export landscape has witnessed substantial growth over the past decade. From 2001 to 2010, 736 transfers of UAS and loitering munitions were recorded, a number that increased to 1,734 transfers from 2011 to 2020. Notably, the proliferation of armed UAS and loitering munitions has played a pivotal role in this growth, with China emerging as a key exporter during the second decade.

The United States, although exporting fewer UAS systems in terms of quantity, represents a significant portion of global UAS capability due to the advanced nature of its systems. The report also identifies other notable exporters, including the UAE, Turkey, Poland, and Austria.

Figure 5. UAS and Loitering Munitions Deliveries by Exporter, 2000–2021 (SIPRI Arms Transfers Database, 2022; CSIS, n.d.)

Implications of the Global UAS Market Dynamics

The profound impact of the Chinese and Israeli dominance in the global Uninhabited Aerial Systems (UAS) market extends beyond economic success and stems from a combination of political and military considerations. This chapter delves into the implications of this market landscape and its influence on U.S. exports and regional import trends.

Chinese and Israeli Dominance

The prominence of Chinese and Israeli UAS in the global market can be attributed to various factors. From a military perspective, these systems offer lower unit costs compared to their U.S. counterparts. The cost-effectiveness of these systems is a significant driver of demand, making them an attractive option for countries with budget constraints.

On the political front, both Israel and China have shown a willingness to supply UAS to states that may not meet human rights standards or have mixed human rights records. U.S. companies are often restricted from selling advanced long-range weapon systems to such countries due to humanitarian and ethical concerns.

China, in particular, has positioned itself as a major supplier of large armed UAS to countries without stringent considerations of their humanitarian and human rights practices concerning the use of precision munitions. This readiness to trade arms irrespective of human rights concerns can significantly influence global demand.

U.S. Export Challenges

Given the substantial demand generated by states that are inclined to procure UAS from China and Israel, U.S. companies may face challenges in exporting their systems. The U.S. government maintains legitimate export concerns, particularly when it comes to advanced UAS systems.

Nonetheless, the United States has made progress in the global market by planning and executing sales of UAS systems, such as the Global Hawk platform. Despite being unarmed, these systems had previously fallen under stringent Missile Technology Control Regime (MTCR) Category I controls, highlighting a shift in U.S. export policies.

Major Importers and Regional Import Trends

Regional import trends provide further insights into the dynamics of the global UAS market. Notably, the Near East and Africa have emerged as the primary source of increased UAS and loitering munition demand during the 2011–2020 period.

  • Near East: This region accounts for the most substantial share of UAS and loitering munitions by value. Saudi Arabia and the UAE have been prominent importers, with China serving as a leading source for UAS.
  • Africa: The growth in African imports is attributed to countries like Nigeria and Sudan, which have shown a notable increase in demand, mirroring trends observed in the Near East. These African nations have also turned to China as a primary supplier of UAS.
  • Europe and Eurasia: This region, while not the largest importer in terms of estimated production costs, has maintained consistent demand for UAS throughout the entire period. The United Kingdom and NATO feature prominently among the importers, with countries like Azerbaijan and Germany also actively procuring UAS.
  • East Asia and the Pacific: This region ranks as the third-largest importer, with countries like South Korea, Indonesia, the Philippines, and Singapore acquiring UAS from various sources, including the United States, China, and Israel.
  • South and Central Asia: While this region has experienced a slight decline in UAS imports, it remains significant. India’s purchases have decreased, while Pakistan has increased its imports from China.
  • Deliveries to the United Nations and Unknown Recipients: These constitute a smaller portion of UAS transfers in terms of estimated production costs, but they play a role in the global UAS market. Notably, a considerable percentage of imports to the United Nations or imports with unknown recipients have been UAS, underscoring the diverse nature of UAS use.

Understanding these import trends and regional dynamics is vital for comprehending the intricate nature of the global UAS market and the implications of the dominant players, namely China and Israel, on international UAS commerce.

Choice of Systems for Top Importers

This chapter offers an in-depth analysis of the systems favored by the top 10 importers in the global Uninhabited Aerial Systems (UAS) market, providing insights into the dynamics of UAS exports and the types of systems that have witnessed significant proliferation in recent years. Additionally, it explores the characteristics of the top importing states, categorized by their military alliances, defense budgets, and specific needs.

Proliferation of UAS Capabilities

A closer examination of the UAS transfers to the top 10 importers reveals a concentrated choice of systems, particularly in the last five years. The significant proliferation of capabilities during this period has been driven by the sale of specific UAS systems:

  • Wing Loong-2: A Chinese UAS system similar to the U.S.-made Reaper family. These systems boast long loiter times, the capability for arming, and are of comparable size.
  • Global Hawk (RQ-4A): A high-end U.S. system that can remain aloft for up to 30 hours at high altitudes, making it suitable for strategic reconnaissance tasks.
  • MQ-9 Reaper: Known for its role as an armed UAV in U.S. counterterrorism and counterinsurgency efforts, the Reaper shares similarities with the Wing Loong-2.
  • Israeli Hermes and Heron: These systems, similar in size and capability to the TB2, are marketed as armed platforms.

This proliferation of capabilities primarily arises from the demand for high-end UAS systems like the Reaper and Wing Loong-2, which offer versatility and advanced features, making them attractive to a wide range of importing countries.

Characteristics of Top Importing States

In the context of the top 25 importer countries, these nations exhibit various characteristics that influence their choices in UAS procurement. The top importing states can be categorized into different groups:

  • Larger U.S. Treaty Allies: This group includes nine countries with advanced militaries, including NATO members and notable cases like Turkey and South Korea.
  • Countries with Moderate Defense Budgets: Ten countries within this group have allocated an average of 2.65% of their GDP to military spending between 2000 and 2020, with India being the lowest at 2.69%.
  • Frontline States: This category includes two frontline states, the Philippines and Ukraine, both with unique geopolitical situations and defense needs.
  • Pivotal Regional Players: Indonesia, Nigeria, and Egypt hold the 13th, 16th, and 19th positions, respectively, and play pivotal roles in their respective regions.

These distinctions reveal the varied interests and priorities of top importers, which can guide their future procurement decisions regarding UAS. Larger U.S. treaty allies typically purchase UAS from Israel or the United States. In contrast, countries with moderate defense budgets are prominent customers of China and Israel, often favoring midsize systems like the Heron. The remaining frontline states prioritize military spending, as UAS offers an efficient means to project power while managing cost constraints.

Frontline states, in particular, emphasize the need for minimum viable capabilities that can operate effectively even when faced with adversaries possessing robust counter-UAS capabilities. Features like autonomy and attritability become crucial in such scenarios, making lower-end systems like the TB2 more attractive.

By identifying these distinct market segments, this chapter highlights the potential areas of future demand for UAS and underscores the importance of considering the proliferation implications for policymakers and analysts in the UAS industry.

Figure 6. Top 10 Recipients of UAS and Loitering Munitions Deliveries (SIPRI Arms Transfers Database, 2022; CSIS, n.d.)

Conclusions

The rapid growth of armed Uninhabited Aerial Systems (UAS) imports, particularly in the Middle East and Africa, poses a critical challenge and presents multiple paths for the future of UAS export goals. This chapter delves into the potential strategies that can be pursued, recognizing both the concerns and opportunities in this dynamic landscape.

Convergence Approach

One potential approach is to advocate for the continued convergence of UAS treatment with conventional aircraft and ordnance and munitions, which the United States more freely exports. However, this path does not adequately address the broader concerns related to the use of UAS by nations, especially those with mixed human rights records. Achieving this convergence may be more feasible for states that are parties to international agreements such as the Joint Declaration on UAS, members of the Arms Trade Treaty or Missile Technology Control Regime (MTCR), and those with a track record of complying with end-use agreements. While this approach aims to facilitate UAS exports, it may not comprehensively address the strategic implications associated with the proliferation of these systems.

Focus on Frontline Nations

Another alternative is to intensify efforts to meet the demands of frontline nations, particularly in the Asian and Pacific regions. UAS’s ability to establish dominance in the information environment during competitive phases with great powers has become a pertinent consideration. In conflicts with technologically advanced adversaries, UAS can substantiate battlefield claims and challenge the narrative. Furthermore, UAS support roles, including command and control, are crucial in high-emission environments, which may be less suited to low-observability high-end UAS and crewed aircraft. These frontline states require UAS systems produced in sufficient quantities to withstand attrition from modern integrated air defenses. Meeting this demand may involve the evolution of existing systems or the development of new technologies, with export control policies likely mirroring those for legacy systems.

Striking the Right Balance

Balancing the imperative of preventing the unnecessary proliferation of UAS capabilities with the necessity of providing allies and partners with the systems they require is a complex and critical task. U.S. companies operating in this arena are subject to government decisions regarding the proliferation of UAS capabilities. While domestic demand for UAS continues to grow, driven by evolving concepts of UAS employment, the future of global demand appears robust as frontline states seek access to new capabilities. Navigating this intricate landscape and addressing the varied interests of stakeholders, including industry and government, will be a formidable challenge that requires careful consideration and policy-making.

In conclusion, the rapid expansion of the UAS market necessitates a comprehensive approach that balances the need for responsible proliferation controls with the demand for advanced UAS systems among frontline states. This chapter underscores the importance of strategic decision-making and policy adjustments to ensure the responsible use and export of UAS technologies in an ever-evolving global security landscape.


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