Saudi arms contract

Oil, profits, sleaze and hypocrisy

THE FINANCIAL Times called it 'An arms deal that stinks of hypocrisy'. The FT does not normally rail against commercial deals that make super-profits for big business.

Kevin Parslow

However, this military deal with Saudi Arabia by BAE Systems, formally British Aerospace, has wider ramifications than the business world.

In 1985, Thatcher's Tory government concluded the al-Yamamah contract to supply military hardware to Saudi Arabia. This has been worth an estimated £43 billion to BAE Systems, which makes it British capitalism's biggest export order. To 'facilitate' the deal, BAE agreed to pay £30 million a quarter to Prince Bandar bin Sultan, the then Saudi ambassador to the US and son of the defence minister and crown prince.

This was largely financed through taxpayer's money from a government establishment, the Defence Export Services Organisation, first established by Labour defence secretary Denis Healey in 1965. It was to be paid into Riggs Bank in Washington, which included amongst its customers former Chilean dictator General Pinochet, to facilitate Bandar's opulent lifestyle.

Bandar was already a very wealthy member of the oil-rich, feudal and religious reactionary Saudi royal family, who have no record of supporting democratic rights in their state. They have frequently asked for exiled dissidents to be sent back for trial from the UK and other countries.

Bandar had already sent a suitcase stuffed with notes worth $10 million to Italy's Christian Democrats to stop the Communist Party winning the 1983 Italian general election. Yet Thatcher's contract was continued by successive prime ministers Major and Blair.

When Blair first came to power in 1997, his foreign secretary, Robin Cook, announced that Britain would pursue an ethical foreign policy.

However, this deal was continued as were the payments throughout the Blair years. Even this week, a new deal is expected to be signed for the Typhoon Eurofighter.

However, in 2001 part of the Anti-Terrorism, Crime and Security Act, passed after the 9/11 attacks, outlawed business bribery and corruption even when such acts occur outside the UK. The government had also signed up to the Organisation for Economic Co-operation and Development's anti-bribery convention in 1999.

Whether or not payments to Bandar were illegal before these dates, they would be since. So the Serious Fraud Office (SFO) was asked to investigate these payments to Bandar and other 'intermediaries' in the arms trade.

But last November the government called off the SFO inquiry when it appeared they would try to gain access to Saudi accounts held in Switzerland and part of the Saudi royal family threatened to pull out of a further multi-million pound arms contract.

The Saudi part of the inquiry was ended on the grounds of 'national security interests', although the investigation into arms deals with South Africa continues. However, the OECD and the US are both continuing investigations into the deal.

For British capitalism Saudi Arabia is a vital 'ally' in the 'war against terror', provides Britain with a large amount of oil and supports the status quo in the Middle East, for which service Britain supplies arms. It is not in British capitalism's commercial interests to upset this particular applecart.

Foreign policy

Carne Ross, a former British diplomat, spilled the beans about British foreign policy in the guardian on 9 June. "For decades," he wrote: "British policy towards Saudi Arabia has been dominated by al-Yamamah... When I worked on the Middle East at the Foreign Office in the mid-90s, it was widely assumed that, along with uninterrupted oil supplies, this was what Britain's Saudi policy was 'about'.

"Any other concern, whether of human rights or the export of radical Wahabi Islam, was by and large secondary... To think otherwise, that British policy - 'our' policy as we called it (though it was never democratically debated, of course) - should be about human rights or Saudi Arabia's contribution to global security, would have been dismissed as naive or fanciful...

"Saudi Arabia... has one of the worst human rights records in the region; its record on imprisonment without trial and denial of political rights is at least as bad as that of Iran or Syria. A simple question for those who affirm the realism of British policy towards Saudi Arabia: are political repression and autocracy likely to feed terrorism?"

Like the FT, socialists think this stinks. Unlike the FT, we challenge the whole capitalist system that uses bribery and corruption of unsavoury characters to make deals and profits.

It is also another example of Blair's use of sleaze to gain favour round the world.

But socialists cannot rely on inquiries from establishment figures like Lord Woolf to establish the truth. Nor would we make thousands of defence workers redundant because of the crimes of their bosses, as Blair said would have happened if the deals were not made.

Socialists would convert any lost jobs in arms manufacture into socially useful production under workers' control and management as part of an overall socialist plan which would benefit the workers of this country and internationally rather than destroy them.

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In The Socialist 14 June 2007:

Fight for a living wage