MEED reported in July that negotiations between BAE Systems and Riyadh were at an advanced stage about the upgrading of the RSAF Tornadoes from GR1 to GR4 standard (MEED 8:7:05). It is now understood that the deal, approved by King Abdullah, calls for about 64 interdictor-strike (IDS) variant of the Tornado to be upgraded and about 32 of the advanced defence variant (ADV) type to be replaced. It is estimated the deal may be worth up to $5,000 million and is the biggest new defence contract for BAE Systems in the kingdom for a decade. It is understood that the contract has yet to be signed. BAE Systems declined to comment.

According to a Saudi Press Agency statement on 2 October, an official source at the Defence & Aviation Ministry denied the reports about secret talks between Saudi and British officials to purchase the Eurofighter, which is being developed by a European consortium including BAE Systems.

Analysts say that by upgrading the Tornado, the kingdom can avoid making new aircraft purchases by at least 10 years. King Abdullah has also announced that the priority for public spending, despite the massive surge in oil income, will be domestic public services, including health and education.

Sources say that Riyadh has made no demand that the UK government take action against Saudi dissidents Abdulaziz al-Massari and Saad al-Faqih in order to get the defence deals. A report in the UK's Guardian newspaper on 27 September, which suggested that a defence deal was subject to the condition that Al-Masari and Al-Faqih should be deported, that British Airways (BA)should resume flights and that a corruption investigation implicating the Saudi ruling family and BAE Systems should be dropped was dismissed as wrong.

'It is untrue that the Saudi government has made conditions on the UK in return for the arms deal,' a source has told MEED.

MEED understands that Riyadh, after last-minute appeals for BA to maintain flights to the kingdom, would now be reluctant to accept the resumption of the airline's flights to the kingdom. UK carrier BMIhas been assigned the mandate for direct flights between Saudi Arabia and the UK (see page 24).

UK weekly The Business on 2 October reported that France is closing in on a major defence deal. French President Chirac has had two private meetings with King Abdullah before and after his accession on 2 August. On 15 April it was reported by French daily Les Echos that France's Dassault Aviation was to be awarded a contract for 48 Rafale combat aircraft, but it was subsequently dismissed (MEED 22:4:05).

A Dassualt spokesman told MEED on 5 October that 'it's not for President Chirac to be negotiating on behalf of Dassault, and Dassault is not involved in any discussions.'

Sources in Riyadh say that the possibility that France will secure a major deal cannot be ruled out, particularly in the light of the kingdom's new contract for BAE Systems. Says one source: 'Saudi Arabia has traditionally allocated most of its defence contracts between the US, the UK and France.'

www.meed.com/defence