It will be one of the biggest rounds of military spending the Middle East has ever known. There is much to play for and, even now, multi-billion-dollar arms deals are being discussed behind closed doors in Riyadh, London, Paris and Washington. Many others have been agreed. One or two, as expressions of interest and memorandums of understanding (MoUs), are already hidden in plain sight. The combined value of the defence deals, conservatively estimated at $40,000 million, will probably never be known for sure, spread across numerous budget lines over many years to come. But if all goes according to plan, the first official details will begin to filter into the public domain in April, when Saudi Arabia is expected to confirm an initial order for at least 24 of an agreed 72 Eurofighter jets - the backbone of a massive spending programme that will give the kingdom, in the words of one Saudi source, 'the most powerful air force in the Middle East after Israel' and make it the most decisive military actor in the Gulf.
The Eurofighter deal has already been described as 'another Al-Yamamah' - in reference to the rolling bilateral defence programme signed by London and Riyadh in 1985.Al-Yamamah is thought to have generated sales in excess of $40,000 million in the last two decades and earned the UK's BAE Systems up to $1,000 million a year in service and maintenance support contracts. Some 120 ground attack and air strike versions of the Tornado, 90 Hawk jet trainers and at least 50 PC-aircraft have been delivered to the Royal Saudi Air Force (RSAF) under the programme - many of which will be upgraded under the latest deal.An MoU for the delivery of an unspecified number of Eurofighters was signed late last year, and both governments have been working on the detailed contracts since. BAE and the Eurofighter consortium say they are unable to comment on government-to-government negotiations, beyond stating that negotiations 'are continuing, and continuing well'. The UK Ministry of Defence has also declined to comment. The official signing of at least part of the deal is understood to be imminent, however, although according to one source, 'the sheer scale, size and complexity of this deal mean it will take longer to complete fully'.The devil is in the detail, and the development of the Eurofighter is already a fiendishly complex operation. The aircraft is assembled in four different countries, in three separate tranches, and delivered to five main European customers whose allocations have been tied up well in advance (see box, page 6). For a country such as Saudi Arabia to take delivery of any aircraft in the next decade, considerable juggling of allocations is required - in the longer term, all four production lines will have to be expanded. At least 12 Typhoons are expected to be drawn from the UK's first delivery of tranche-2 aircraft, and will be among 24 Eurofighters earmarked to replace the 32 advanced defence variant (ADV) aircraft in the RSAF's existing 96-strong fleet of Tornados. A deal to sell some of the replaced aircraft to Chile is understood to be a possibility.UpgradesIt will be one of the biggest rounds of military spending the Middle East has ever known. There is much to play for and, even now, multi-billion-dollar arms deals are being discussed behind closed doors in Riyadh, London, Paris and Washington. Many others have been agreed. One or two, as expressions of interest and memorandums of understanding (MoUs), are already hidden in plain sight. The combined value of the defence deals, conservatively estimated at $40,000 million, will probably never be known for sure, spread across numerous budget lines over many years to come. But if all goes according to plan, the first official details will begin to filter into the public domain in April, when Saudi Arabia is expected to confirm an initial order for at least 24 of an agreed 72 Eurofighter jets ? the backbone of a massive spending programme that will give the kingdom, in the words of one Saudi source, ?the most powerful air force in the Middle East after Israel? and make it the most decisive military actor in the Gulf.
The Eurofighter deal has already been described as ?another Al-Yamamah? ? in reference to the rolling bilateral defence programme signed by London and Riyadh in 1985.
Al-Yamamah is thought to have generated sales in excess of $40,000 million in the last two decades and earned the UK?s BAE Systems up to $1,000 million a year in service and maintenance support contracts. Some 120 ground attack and air strike versions of the Tornado, 90 Hawk jet trainers and at least 50 PC-aircraft have been delivered to the Royal Saudi Air Force (RSAF) under the programme ? many of which will be upgraded under the latest deal.
An MoU for the delivery of an unspecified number of Eurofighters was signed late last year, and both governments have been working on the detailed contracts since. BAE and the Eurofighter consortium say they are unable to comment on government-to-government negotiations, beyond stating that negotiations ?are continuing, and continuing well?. The UK Ministry of Defence has also declined to comment. The official signing of at least part of the deal is understood to be imminent, however, although according to one source, ?the sheer scale, size and complexity of this deal mean it will take longer to complete fully?.
The devil is in the detail, and the development of the Eurofighter is already a fiendishly complex operation. The aircraft is assembled in four different countries, in three separate tranches, and delivered to five main European customers whose allocations have been tied up well in advance (see box, page 6). For a country such as Saudi Arabia to take delivery of any aircraft in the next decade, considerable juggling of allocations is required ? in the longer term, all four production lines will have to be expanded. At least 12 Typhoons are expected to be drawn from the UK?s first delivery of tranche-2 aircraft, and will be among 24 Eurofighters earmarked to replace the 32 advanced defence variant (ADV) aircraft in the RSAF?s existing 96-strong fleet of Tornados. A deal to sell some of the replaced aircraft to Chile is understood to be a possibility.
Upgrades
A related deal, approved by King Abdullah in late September, will see the remaining 64 interdictor-strike (IDS) Tornados upgraded from GR1 to GR4 standard. This component alone may be worth as much as $5,000 million, but it is not the end of the story as far as BAE is concerned. Although the economic offset element is likely to be smaller than the original Al-Yamamah programme, the overall scope of agreement is expected to contain major subsidiary contracts for technology transfer, maintenance and training. In the longer term, it is understood there may be an eventual requirement for as many as 100 Eurofighter Typhoons. This implies further downstream spending ? any aircraft that are not diverted from existing allocations would still be built by the members of the Eurofighter consortium, but would most likely be assembled in the kingdom.
?The Eurofighter deal is part of a massive upgrade that is being seen as a matter of urgency,? says an informed source. ?They are talking now about diverting some of the aircraft that will be rolling off the line as early as 2008/09, possibly from Austria.? And while it is expected to remain in service well beyond 2040, the Typhoon is not the only fighter of choice. ?The Royal Saudi Air Force is looking for another major plane,? says the source.
New deals
At present, there are few fighter aircraft of the order of the Eurofighter on the market. Development of the proposed US/UK Joint Strike Fighter is still many years off. Saudi Arabia already has an estimated 84 operational F15s, and continues to upgrade its US fleet ? in October, the US? Congress was notified that Riyadh had requested contracting, technical and logistical support worth some $760 million. But its fleet of F5 aircraft is ageing fast and the RSAF is now on the lookout for fighter aircraft with a longer shelf life.
One possibility is the Rafale, manufactured by France?s Dassault Aviation. Reports emerged a year ago that a $7,850 million deal had been agreed during the visit of then-crown prince Abdullah to Paris. Under the reported deal, the kingdom would buy 48 of the combat aircraft from Dassault, with the option to purchase another 48 at a later date. Much was made of the fact that no agreement was signed by President Chirac during a visit to Riyadh in early March ? the Rafale was seen by many as a rival to the Eurofighter deal. But a French contract is understood to be still open to negotiation. ?It is by no means a lost cause,? says an in-kingdom source. ?And is not a case of either/or ? the British have never had any reason to believe the Eurofighter MoU was under threat. That is effectively a done deal. The RSAF isinterested in the Rafale ? the pilots like the plane. The main question is over in-kingdom [technical, training and maintenance] support, as the French don?t have the same sort of established presence as the British.?
Also open to negotiation is an estimated $9,000 million border security contract, which a consortium led by France?s Thales Group has been discussing for several years (see box, page 4). Spending on internal security ? a hot topic in the wake of the Abqaiq attack ? is expected to increase considerably over the next decade. The RSAF is drawing up plans for a helicopter regiment, while a $918 million deal to modernise the 100,000-strong National Guard is awaiting US congressional approval.
Until recently, Saudi military expenditure was in decline. But the kingdom?s defence spending has rarely dropped below 10 per cent of its gross domestic product (GDP). Recent trends indicate the kingdom must spend a minimum of about $13,000 million-15,000 million a year to maintain its present forces.
Defence spending is on the rise again, however, and this time reform and integration are key elements. ?What?s changing is that conventional defence is blurring into national security ? you are no longer looking so much at country-to-country deterrence as counter-terrorism and border security,? says one defence contractor. ?It?s happening to all the countries in the region. It?s a fascinating scenario.?
That is not to say the days of conventional big-ticket military sales are over, however. Since the invasion of Iraq, Arab governments have been increasingly wary of a resurgent Iran and a perceived military imbalance in the region. Whether the Eurofighter proves an effective deterrent is another matter, but Saudi Arabia is just one of many potential customers for the aircraft and its rivals. n
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