UK confident that U.S. will grant export licenses for Saudi Eurofighter deal

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UK confident that U.S. will grant export licenses for Saudi Eurofighter deal

Thomson Financial News
 LONDON (Thomson Financial) - The UK government said it believes a debate in the U.S. over the licensing of technology necessary for Britain to sell Eurofighter Typhoon jets to Saudi Arabia will not scupper a 20 billion pound deal.

The State Department must approve the transfer of U.S. technology on the fighter before Britain can export 72 jets to Saudi Arabia as part of the Al-Salam deal.

However, the State Department has encountered opposition from the Justice Department, the Financial Times reported on Friday, citing a senior administration officer.

U.S. officials are reportedly concerned that UK defence company BAE Systems Plc. (other-otc: BAESF.PK - news - people ), which is the main contractor on the deal, is also under investigation by US authorities over alleged bribes to Saudi Arabia in the previous Al-Yamamah arms deal, the FT said.

A U.S. official said the justice department had concerns that approval could hamper the Al-Yamamah investigation, the newspaper reported.

Another senior administration official told the Financial Times that, in light of the ongoing investigation, the justice department did not want the state department to say it was unaware that BAE had broken any laws.

The UK Ministry of Defence said it was aware of the rumours, but it believes the debate will not result in a refusal to allow the technology transfer.

'We fully expect the necessary export licenses to be granted and we continue to work closely with the US Government to obtain them,' it said in a statement.

BAE Systems, which has denied any wrongdoing in the previous deal, said manufacture of the aircraft was continuing.

'As the systems integrator, I can confirm that integration and manufacture of Typhoon at Warton is on schedule and contract obligations are being met,' a company spokesperson said.

Al-Yamamah was back in the news last week when the High Court ruled that a UK government decision to end a Serious Fraud Office investigation into the deal was unlawful.

paul.sandle@thomson.com

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http://www.forbes.com/markets/feeds/afx/2008/04/18/afx4906155.html