Britain sells Saudis Eurofighters in $19 billion deal

[Roger the Horse]

Saudis in $19bn Eurofighter deal
By James Boxell in London

Published: August 17 2006 22:05 | Last updated: August 18 2006 08:32

Britain and Saudi Arabia have reached agreement on a £10bn ($19bn) deal to replace the kingdom’s fleet of Tornado aircraft with new Eurofighter Typhoons, a contract that will extend the UK’s biggest export deal for the next 25 years.

The agreement, a boost to BAE Systems, Britain’s biggest weapons manufacturer, comes 20 years after the UK first signed the controversial Al Yamamah arms deal with Saudi Arabia.

Des Browne, UK defence secretary, signed up to the agreement, which will see Saudi Arabia acquire 72 Eurofighter jets, four weeks ago. His Saudi counterpart, Prince Sultan bin Abdul-Aziz, signed up in the last week.

The Saudi Finance Ministry is authorising the first payment on the new agreement, which could come as early as next week, though people close to the talks cautioned that it could be delayed. Once the payment is confirmed, BAE will be required to make an announcement to the London Stock Exchange confirming the details.

A final contract is expected by the end of the year.

BAE said on Friday that it welcomed the deal, news of which sent the group’s shares 3 per cent higher to 371p in early London trading.

The latest agreement could be worth as much as £20bn across its 25-year life, as in the past original contracts have supplements with lucrative maintenance and upgrade work.

The UK will also be keen to pursue other potential deals, including the sale of new Hawk training jets built by BAE.

The Eurofighters will cost the Saudis about $10bn (£5.4bn, €8bn), with an additional £5bn expected for on-board missiles, other parts and initial support.

The original 1986 Al Yamamah deal has been worth more than £40bn in revenues to BAE and its partners.

The new deal is the biggest export deal by far for the long delayed and hugely over-budget Eurofighter, and a boost for the consortium of four nations – Britain, Germany, Italy and Spain – building the jets.

BAE’s industrial partners in Eurofighter, EADS, the Franco-German aerospace group, and Italy’s Finmeccanica, will also benefit.

However, Scott Babka, aerospace analyst at Morgan Stanley, said BAE would be the biggest beneficiary by far, as it would be “prime contractor” on the Saudi-bound Eurofighters.

He estimated BAE could receive two-thirds of the revenues from the Saudi deal.

An understanding agreement was reached between UK and Saudi ministers in December, but King Abdullah was eager that the deal should be amended to remove the Al Yamamah name.

That original “oil for arms” deal has been surrounded by allegations of unethical practices and King Abdullah has embarked on an anti-corruption campaign. The new Eurofighters will be paid for in cash, not barrels of oil.

The deal will be a disappointment to France, which still hopes to sell its own Rafale fighter jets, built by Dassault, to the Saudis.

Copyright The Financial Times Limited 2006

Erm. So we are incredibly worried about terrorism. Most of the alleged 911 hijackers were from Saudi Arabia. They apparently provide funding to terrorists. What should we do? Oh yeah. Lets sell billions of dollars worth of war planes to them.

Must be part of Blair's once vaunted Ethical Arms Policy I suppose!

[Roger the Horse]

And this from the BBC online news saying that the deal is worth more than £6 billion but possibly £10 billion.

http://news.bbc.co.uk/1/hi/business/5262120.stm

I suppose at least they mention that the deal is open to criticism:

Yet while the deal is welcome news for UK business, it will inevitably attract criticism from those who say UK defence companies should not do business with Saudi Arabia because of the Saudi government's poor record on human rights and democracy.

But surely with so much newspaper space devoted to this never ending 'terrorist' threat you'd have thought they might at least have mentioned Saudi Arabia's place in Bush's grand War on Terror?

Or then again maybe not eh?

[Garcon Warrior]

Give it a couple of years after they are built and the "war on terror" turns to the Saudi's our governments can say they that have great fighter planes which are a threat to our freedoms.

[scubadiver]

There is loads of evidence for Saudi support for terrorism (I am currently reading "The war on truth").

Are these planes going to be used to fight terrrorism or support terrorism?

[Roger the Horse]