The Arabian Connection: The UK Arms Trade to Saudi Arabia

Summary

Written and researched for CAAT by Chrissie Hirst
ISBN: 0 9506922 5 5

Executive Summary

The bulk of the UK arms trade to Saudi Arabia resulted from the reluctance of the United States to supply the kingdom. Each tranche of the infamous Al Yamamah deal followed refusals by Congress to allow large packages of US arms to be sold to Saudi Arabia. Thatcher’s government, however, had no qualms. The UK stepped eagerly into the gap, signing Al Yamamah I, the largest ever UK arms contract with a foreign customer, in 1986, and Al Yamamah II, "the biggest [UK] sale ever of anything to anyone", in 1988 (Financial Times, 9.7.88). The Al Yamamah sales were a UK endorsement of a country with a history of brutal repression and a "persistent pattern of gross human rights abuses" (Amnesty International Report 1999).

The US Congress had well founded fears about the sense or value of such sales. The Middle East, a notoriously volatile region, is hardly the ideal destination for UK arms. The arms-to-Iraq affair highlighted the danger of supplying arms to unstable regimes, when in the 1991 Gulf War UK and US forces faced an army equipped by their own military industries. While Saudi Arabia is one of the more stable countries of the region, it has publicly pledged support for the Palestinian cause and is known to have sent arms to Iraq through Jordan. There is also strong evidence that the kingdom funded various counter-revolutionary movements, including the Taliban in Afghanistan, and the nuclear programmes of Iraq and Pakistan. There is much to suggest that Saudi Arabia is not a reliable ally or end-user, and, as the Al Yamamah deals have Crown Status, there is no legal restriction preventing further transfer of weapons out of the kingdom.

Despite the lessons of the Gulf War, and despite the Middle East Arms Control Initiative which followed it, the UK and the US have continued to supply large quantities of arms to the region. In 1998, the Middle East remained "by far the largest market" for complete weapons systems and Saudi Arabia "remained by far the largest national market for arms" (International Institute for Strategic Studies, IISS, ‘The Military Balance 1999/2000’). This influx of arms is not helping the countries of the Middle East. It promotes an ‘arms race’ mentality and contributes to regional instability. Over the past fifteen years military spending has consistently been the largest item on Saudi Arabia’s budget, on average accounting for a third of all spending per year.

The Saudi budget for 1999 has been described as an ‘austerity budget’, despite the fact that Saudi Arabia has traditionally been one of the most affluent countries of the world. This is of no real surprise when the source of the kingdom’s wealth is considered. Oil, Saudi Arabia’s sole resource, is intrinsically unreliable as a source of income - inevitably, the country’s fortunes rise and fall with fluctuations in the international price of oil. Although the oil price has now risen again, "few in the industry think it will stay that high for long" (Business Week, 28.2.00). Commentators describe the "delicate politico-economic balance" that keeps the monarchy in power: a significant period of low oil prices could put this balance in jeopardy, feeding various dissenting bodies within the kingdom (BBC News Room, 19.1.99). Saudi Arabia’s extraordinary levels of military spending have contributed to budget deficits that may have the potential to threaten the stability of a kingdom "not yet in crisis but facing serious economic and social problems" (The Economist, ‘World in 2000’, 1999).

Saudi Arabia’s dependence on oil is mirrored by the UK’s dependence on Saudi Arabia as its main customer for military products. Neil Cooper describes the UK’s "overwhelming reliance" on Saudi contracts in the early nineties, a reliance which has resulted in a dangerous "condition of dependency" that has repeatedly undermined the independence of our government (Cooper 1997, p149). UK government policy has frequently been dictated by the need to retain the Saudi market, often eroding public accountability and the integrity of government institutions.

The benefits to the UK are far less clear than the ‘Thousands of Jobs Saved’ headlines would have it seem: expert economic analysis has shown that both the billion-pound Al Yamamah deals and huge government investment have paid few real dividends. The fact that the bulk of payment was made in oil under a barter scheme meant that the Saudis were often behind with payments due to variations in oil prices; as Treasury official Robin Fellgatt commented, "an arms sale on credit if someone does not pay up is of no economic benefit, quite the reverse" (Koorey 1995, p51). Economic benefits which are, at best, unclear provide little justification for unethical export policies.

The real profit has most likely been into the pockets of those who orchestrated the deals. The pervasive scandal and rumour surrounding Al Yamamah suggest that the motivation behind supplying the kingdom may have come from those few individuals who directly benefited from ‘commission’ payments. The Dooley court case in the US in 1991, the 1994 Granada TV ‘World In Action’ programme, the allegations concerning Mark Thatcher in 1994, the 1996 Westland memo on the Saudi dissident Mohammed al Mas’ari, the Rolls Royce court case in 1997 and the Jonathan Aitken affair, all support suggestions that, contrary to UK and Saudi law, "commissions are an essential part of the system" (Times, 12.10.94).

Ever since the signing of Al Yamamah I there have been repeated media allegations and many demands by politicians and the public for transparency. However, the government has only launched one investigation into the corruption associated with the deals, an internal inquiry with a narrow remit, the findings of which were suppressed. As Dr Kim Howells, MP for Pontypridd and member of the Public Accounts Committee (PAC) said, the non-publication of the National Audit Office (NAO) report was "most unsatisfactory. If we can’t see the report, and it goes right to the heart of the problem, what does the PAC exist for?" (Observer, 10.5.92). Martin O’Neill, the then Labour Defence Spokesman, pledged at the time that a Labour government would re-open the inquiry, however, the present government has maintained its predecessor’s refusal to release the NAO report (Independent, 12.3.93).

The Al Yamamah deals are far from the economic godsend that they have been portrayed as, and have earned the UK little, if any, real profit. More seriously, they have undermined our government’s integrity as corruption and human rights issues were ignored in the rush to export. CAAT continues to campaign for the publication of the NAO report into Al Yamamah and perhaps, as the deals wind down, this may be forthcoming, though as yet there is no sign of such a move. In spite of the arms-to-Iraq debacle, the UK has continued to supply weapons to Saudi Arabia without end user restrictions regardless of the risk that UK weapons may again fall into ‘enemy’ hands. As Saudi Arabia faces serious economic and social problems and arms imports continue to destabilise the Middle East, it is to be hoped that the UK government will not push for further contracts.

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