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UK: Britain in $70 Billion Jet Deal With Saudi Arabia

Agence France Presse
December 21st, 2005

Britain is to supply Saudi Arabia with Typhoon jets in a massive deal reported to be worth up to 70 billion dollars, that primarily benefits British company BAE Systems, the Ministry of Defence said.

The Typhoon Eurofighter, which is largely manufactured by defence and aerospace giant BAE Systems in partnership with other European countries, will replace the Tornado warplanes supplied to the Saudis in another massive and controversial deal two decades ago.

The governments of the two countries signed a memorandum of understanding aimed at establishing a greater partnership in modernising the Saudi armed forces and developing close service-to-service contacts, especially through joint training and exercises, the defence ministry said in a statement.

The British government recognizes "Saudi Arabia's efforts to develop a regional defence industrial centre of excellence," it said.

As prime contractor, BAE will invest in local Saudi companies, develop an industrial technology transfer plan, and provide suitable training for thousands of Saudi nationals, the ministry added.

The details of these arrangements are confidential between the two governments, the statement said.

"This (Document of) Understanding is good news for both UK and Saudi industry. BAE Systems, as prime contractor, and its many UK sub-contractors will benefit from the work envisaged under this Understanding, which will help sustain several thousand UK jobs over the next 10 years," Defence Secretary John Reid said in the statement.

In addition, the associated technology transfer, training and inward investment packages will generate many skilled jobs in Saudi Arabia, he added.

In London trading, shares in BAE Systems topped the FTSE 100 index, soaring 6.40 percent to close at 370 pence after confirmation of the new contract.

The deal reportedly involved the purchase of 48 Eurofighter Typhoon jets, with an option to raise that to 72 but no official figures were given.

The announcement of the deal was made after Reid met with his Saudi counterpart Prince Sultan bin Abdul Aziz, heir to the Saudi throne, during a visit to Riyadh Tuesday and Wednesday.

Prince Sultan had said earlier in the day Riyadh expected "to reach an agreement with Britain very soon on modern planes."

In September, British newspaper The Guardian reported that London had been in secret discussions with Saudi Arabia over a deal worth up to 40 billion pounds (70 billion dollars, 59 billion euros).

It said Reid had sought to persuade Saudi Arabia to re-equip its air force with the Typhoon.

In October, the oil-rich kingdom denied it was engaged in secret negotiations over the deal, but acknowledged that London would like to sell the planes to Riyadh.

The Eurofighter Typhoon is produced by a consortium comprising the European Aeronautic Defence and Space Company (EADS) with 46 percent, BAE Systems with 33 percent and Italky's Alenia/Finmeccanica with 21 percent.

Citing diplomatic and defence sources The Guardian had said talks between London and Riyadh were deadlocked after the Saudis posed three conditions: the expulsion of two dissidents to Saudi Arabia, a resumption of British Airways flights, suspended because of fear of attacks, and an end to an anti-corruption probe which implicated the Saudi royal family and BAE.

But Prince Sultan denied that the deal was conditional on Britain handing over dissidents.

BAE Systems signed a series of defence contracts with Saudi Arabia covering purchases and maintenance in the 1980s and 90s, which are being probed by anti-corruption investigators.

The Saudi order is the first for the consortium outside Europe, after Singapore dropped the plane from its shopping list in April.

According to the Eurofighter website, delivery of 620 aircraft to the four partner nations of Britain, Germany, Spain and Italy is ongoing while Austria has signed a contract for the purchase of 18.

Greece has committed to 60 aircraft with the option for a further 30 and the Norwegian Ministry of Defence has signed an agreement to participate in the future development of the aircraft.



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