Original URL: http://www.theregister.co.uk/2008/04/18/us_gov_mulls_eurofighter_sale_to_saudis/

US gov may forbid BAE Eurofighter sale to Saudis

Brit kit contains significant US tech. Whoops

By Lewis Page

Posted in Government, 18th April 2008 12:20 GMT

A controversial British deal to supply Eurofighter jets to Saudi Arabia may have hit an obstacle. It appears that the Eurofighter - long touted as proof that the UK and its continental partners can make serious combat kit without American help - actually contains significant amounts of US technology, and that Washington may not permit the Saudi sale.

The revelations come in an article in today's Financial Times. It appears that the British government's application to export American tech on 72 Eurofighters to the desert princes is the subject of some debate both among Capitol Hill politicos and at the Departments of State and Justice.

The British part of Eurofighter is produced by global multinational BAE Systems, headquartered in the UK but nowadays with most of its operations overseas - especially in America. BAE is handling the UK-negotiated Saudi Eurofighter sale, and the company has been under investigation by Justice feds since last year following revelations that allegedly corrupt payments to the Saudi Prince Bandar had moved via US banks.

The Bandar payments, totalling more than $1bn - which the Prince insists were completely legitimate - are linked to a previous UK gov/BAE deal with the Saudis dating from the 1980s. This deal - known as al-Yamamah - was being investigated by the UK Serious Fraud Office (SFO) until the end of 2006. At that point the SFO investigation was shut down, effectively on the orders of Tony Blair.

The SFO decision was recently excoriated in damning terms by British judges following a legal review, saying that Blair had "surrendered" in "abject" fashion to terrorism-related threats delivered in person at Downing Street by Prince Bandar - who was "allegedly complicit in the criminal conduct under investigation, and, accordingly, with interests of his own in seeing that the investigation ceased".

Following the Blair surrender, angry SFO investigators leaked the fact that some of Bandar's money had passed from British government accounts (controlled by the former armsbiz-run MoD sales office, DESO) to an American bank. This triggered the ongoing US Justice investigation, with which the British government has completely refused to cooperate.

Now the US State Department needs to decide whether to grant a tech-export licence allowing the British government to permit BAE's proposed sale of (as it turns out) partly-American Eurofighters to the Saudis. US export regs say such licences may be denied where there is "reasonable cause" to believe that the applicant has violated US law.

Clearly, the Justice department believes there is reasonable cause to think US law has been violated by the Bandar payments. Since the money actually came from a British government account, it could be argued that the UK state - rather than BAE as such - was the actor, and thus should be denied the export permit it is asking for.

According to the FT's informants, Justice officials in Washington certainly aren't happy to let State bureaucrats say they are "unaware" of BAE having broken any US laws. This follows requests for clarification by the US attorney-general from senators on the relevant oversight committees.

But the State people need to be unaware of American laws broken or they can't OK the sale.

A "senior administration official" hinted to the FT that the Feds' position might shift in the event of Blighty cooperating with them on the al-Yamamah probe. Repeated requests for the SFO's files have thus far been met with obstruction and delay in London.

Meanwhile, the British government faces trouble on the issue at home, as it appears all too likely that the courts will explicitly order the SFO probe re-opened. BAE has said all along that everything it did with relation to the Saudis was in concert with the UK government. Given the fact that BAE more or less controlled DESO until its closure last year, that's probably entirely true. If BAE's dirty-laundry hamper gets opened up, it seems fairly certain that every British administration back to 1985 will be implicated.

All that to one side, today's news at the very least appears to have finally destroyed the concept of "appropriate sovereignty" which underpins the current British Defence Industrial Strategy (DIS). The thinking here is that Blighty will pay increased prices for less-capable military kit made partly in the UK, rather than buying cheaper and better gear from abroad. Equipment such as Eurofighter may cost more and do less, but - so goes the reasoning - at least we won't have to ask the Yanks for tech support all the time.

Except that it turns out we will. So the horrendous extra cost of Eurofighter (and Future Lynx, Type 45, A400M etc etc) looks less and less worthwhile.

Read the FT article here. ®