AOI was established in 1975 with the aim of building an advanced technological industrial base. Egypt, Qatar, Saudi Arabia, and the United Arab Emirates founded the Arab Organization for Industrialization (AOI) and capitalized the new organization with more than US$1 billion.These countries set up the AOI to establish an Arab defense industry by combining Egypt's managerial ability and industrial labor force with the Arab countries' oil money and foreign technology. The bulk of the arms manufacturing was intended to take place in Egypt. But the AOI floundered before it could become a major arms producer, because the Arab states broke relations with Egypt over Sadat's peace initiatives with Israel. Egypt kept the AOI functioning in spite of a 1979 proclamation by Saudi Arabia dissolving the body. Some of the AOI's members have renewed military contacts, but as of 1989, the AOI has not been restored to its original status.
The AOI has operated as an independent enterprise since 1979 and is exempt from Egyptian taxes and business restrictions. The AOI consists of nine companies, five wholly owned by Egypt and four joint ventures. The Egyptian plants manufactures missiles, rockets, aircraft engine parts, armored personnel carriers, electronics, radar, communications gear, and assembled aircraft. A joint venture with French firms assembles Gazelle combat helicopters and helicopter engines. A joint venture with the British manufactures the Swingfire antitank guided missile, while another venture with the Chrysler Corporation produces jeeps.
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