Saudi Arabia

The saviour of British Aerospace

Like Iraq until 1990, Saudi Arabia was until 2001 regarded as a crucial friend and ally of the West, especially the US and UK. It supplied vast amounts of oil at a generally moderate price, acting as a restraining influence within OPEC, and it recycled the proceeds by investing them in the West and buying large quantities of expensive Western armaments. In particular its purchases of Hawk and otherwise unsaleable Tornado planes under the Al Yamamah agreements were the salvation of British Aerospace (now BAE Systems), yielding a cash flow of something like £2bn a year for most of the 1990s. The deals were negotiated by the UK government and are generally believed to have been greased by large payments to Saudi princes and go-betweens; the National Audit Office report on these transactions has never been published.

Post-September 11th

Things began to change on 9/11. It was noted that not only bin Laden but most of the Manhattan assassins were Saudis, and dark hints were dropped of the government's complicity. This was manifestly unfair, as the regime, at least as much as Israel and the US, is the target of al Qaeda's wrath. But US and UK politicians suddenly noticed that the Kingdom run by the House of Saud was not a liberal democracy or respectful of human rights. The fact is that the country has outlived most of its usefulness. When Iraq's oil is in full flow under US control, OPEC will be broken and Saudi moderating influence will no longer be needed. The last UK aircraft were delivered in 1998, and BAE Systems now looks mainly to the US market to secure its future. Rumours of Saudi interest in the Eurofighter/Typhoon were denied by the company in 2002, and nothing has materialised.

The continuing connection

However, since the Saudi armed forces are unable to maintain (or indeed to fly) advanced planes, the company still benefits from a lucrative 'support and services solution, including manpower for the Royal Saudi Air Force'.¹ Without giving figures, the company is pleased to note that 'activity on the Al Yamamah programme remains strong, with cash flows benefiting from the strong oil price which underpins programme funding'. According to the UK government's admittedly incomplete figures, arms exports to Saudi Arabia amounted to £63.65m in 2002. And, of course, the Saudi government has been invited to DSEi.

1 BAE Systems Annual Report, 2003