From DefenseNews

 

Posted 09/17/07 11:40

Saudis Sign $8.9B Eurofighter Deal

By ANDREW CHUTER, LONDON

 

The Saudi government has signed a deal with Britain to purchase Eurofighter Typhoon fighters, the largest single export order ever landed by the British defense industry.

A contract covering the delivery of 72 Typhoons was signed Aug 29. Cost of the aircraft was put at 4.43 billon pounds ($8.9 billion), the Saudi Press Agency reported Sept. 17.

A British Ministry of Defence statement confirmed the deal: “This new defence cooperation programme, known as ‘Project Salam,’ builds on a long and successful relationship between the Governments and their armed forces. This agreement will be supported by substantial logistical and training packages, including the opportunity for RAF and Royal Saudi Air Force aircrews and ground technicians to train alongside each other in the UK.”

The first 24 aircraft will be delivered from BAE Systems’ Warton factory in northwest England, with the next 48 aircraft assembled in Saudi Arabia.

The British-built Typhoons will be diverted from an order for the Royal Air Force. The aircraft will be built to the Tranche 2 multirole standard.

The current plan is to eventually top up the RAF order with Tranche 3 aircraft. That phase of the program has not yet been agreed between Eurofighter partners Britain, Germany, Italy and Spain.

Part of the agreement covers the training of Saudi air force pilots and technicians at the Royal Air Force’s Typhoon base at Coningsby, England. The base also hosts Britain’s operational conversion unit and Typhoon front-line squadrons.

A weapons package for the Typhoon covering air-to-air and air-to-ground missiles, including possibly the Storm Shadow cruise missile, is expected to follow, industry sources said.

The two sides signed a memorandum of understanding on the deal back in 2005 and negotiations have been underway ever since. At one point, it looked as though the deal would be shelved by the Saudis over corruption allegations relating to earlier sales of equipment by BAE Systems to Riyadh.

Then-British Prime Minister Tony Blair halted the investigation in December, claiming it would damage the country’s security cooperation links with the Saudis.

Unlike the controversial Al Yamamah deal of the 1980s, where the Saudis paid Britain in oil for purchase of large numbers of Tornado combat aircraft, Hawk jet trainers and other equipment, this latest deal will be financed conventionally.

Al Yamamah has so far netted British defense contractors, principally BAE, more than 42 billion pounds in procurement, maintenance and upgrade work over the past 20 years, according to industry estimates.

BAE is currently undertaking an upgrade program on Saudi Tornado aircraft worth several hundred million pounds.

The Typhoon deal is the latest in a series of recent contracts between the Saudis and BAE. Earlier this year, it was reported the company had secured orders from Riyadh for a command-and-control center and a large number of tactical armored vehicles.

The British company also hopes to sell the Saudis its latest version of the Hawk jet trainer to support the Middle East kingdom’s purchase of the new-generation combat aircraft.

There is no immediate prospect of a Hawk sale, government sources said.

From Jane's

 

Saudi Typhoon buy could herald wave of big arms deals in Middle East

By Tim Ripley

18 September 2007

 

The announcement on 17 September of the purchase of 72 Eurofighter Typhoon by the Kingdom of Saudi Arabia looks set to start a wave of multibillion-dollar defence deals in the Middle East thanks to surging global crude oil prices.

 

The long-trailed Saudi contract is the culmination of more than a decade's work by BAE Systems and the UK government's Defence Export Service Organisation to export the fourth-generation fighter to the UK's biggest defence equipment customer.

 

The deal, which the Saudi Ministry of Defence and Aviation said is initially worth GBP4.43 billion (USD8.9 billion), could eventually be worth more than GBP30 billion over the next 25 years to BAE Systems and its partners in the Eurofighter consortium.

 

Dubbed 'Project Salam', the deal is more than just an arms export contract. It involves the establishment of a Typhoon assembly line in Saudi Arabia and an unprecedented degree of defence technology transfer to a Middle Eastern country.

 

"This new defence co-operation programme builds on a long and successful relationship between the UK and Saudi Arabian governments and their armed forces," the UK Ministry of Defence announced on Monday. "Saudi Arabia continues to be an important strategic ally for the UK in the Middle East, playing a moderating leadership role in promoting regional stability. This agreement will be supported by substantial logistical and training packages."

 

'Project Salam' reportedly involves a series of multilayered contracts and diplomatic agreements. According to the Saudi Press Agency, the deal was finally signed on 29 August and the unit "price of one [Typhoon] is similar to the price when it is sold to the [uK] Royal Air Force [RAF]".

 

BAE Systems said the agreement was expected "to become effective in due course" and the company welcomed the news as an "important milestone in its strategy to continue to develop Saudi Arabia as a key home market with substantial employment and investment in future in-kingdom industrial capability".

 

Unlike the previous Al Yamamah deal that used an 'arms-for-oil' payment mechanism, the new deal will be a cash arrangement, Jane's has been told. Jane's understands that the heart of the deal will involve substantial investment by BAE Systems in a number of Saudi companies, including the Riyadh-based Alsalam Aircraft Company, which will also be contracted to assemble the aircraft. A Typhoon assembly facility is expected to be built in the town of Taif in southwest Saudi Arabia. Press reports in Saudi Arabia suggest some 15,000 jobs are to be created in the kingdom as a result of the project. An industry source close to the project told Jane's: "The Saudi government would never have gone for this deal unless BAE Systems could prove it was going to create thousands of high-value jobs for its people."

 

© 2007 Jane's Information Group