Saudi weighs Eurofighter

 

Saudi Arabia is stepping up efforts to acquire advanced fighter jets to renew its combat fleet amid growing security concerns in the Gulf over the future of Iran, two sources following the matter said on Thursday.

Riyadh is in talks with Britain over possibly doubling a recent purchase of 72 Eurofighter Typhoons with an add-on purchase buttressed by a support deal, and has held exploratory talks with Boeing on adding more F-15s, the sources said.

"Saudi Arabia has not finalised its requirements or decided if it will hold a competition or go with one player" said a source closely following the discussions.

Saudi Arabia is expected to split the purchase into two batches of 36 and there is potential for a total of more than 100 planes as it continues to renew its fleet of 276 combat jets, said one of the sources. Both sources agreed to speak only on condition of anonymity because of the issue's sensitivity.

Splitting the order into three has also not been ruled out.

BAE Systems , which coordinates production of Eurofighter Typhoons recently sold to Saudi Arabia, and F-15 manufacturer Boeing both declined to comment.

Britain's defence ministry and the Eurofighter consortium, grouping BAE Systems, European aerospace group EADS and Finmeccanica of Italy, also declined to comment.

Britain sold Saudi Arabia 72 Typhoons in 2006, the first of which are just starting to be delivered. 

Those 72 aircraft will serve as a partial replacement for the Saudi fleet of Anglo-German-Italian Tornados. But military analysts have long expected the kingdom to return to the market for upgrades to the rest of its Tornados and U.S.-built F-5s.

In 2006, then UK Prime Minister Tony Blair ordered the Serious Fraud Office to halt an inquiry into previous arms deals between BAE Systems and Saudi Arabia due to worries that Riyadh would stop sharing intelligence, harming Britain's security.

Britain's highest court ruled last year that the Serious Fraud Office had acted legitimately but the Organisation for Economic Co-operation and Development criticised the move.

BAE Systems shares rose 2.5 percent.

"For BAE the sentiment would be very good people are a little concerned that global defence expenditure has peaked, so any new orders would help allay those concerns" said Zafar Khan, defence analyst at Societe Generale.

MARKET HEATING UP

Growing demand from the Middle East and Asia for fighters, fuelled by security fears and firm commodity prices, has been a key theme this week at the Paris Air Show held every two years at Le Bourget and alternating with Farnborough in the UK.

Recession-hit commercial jet orders look thin by contrast.

"The air show is returning to where it used to be a few decades ago before commercial jet pronouncements came into vogue. It used to be more about positioning for arms contracts" said aerospace consultant Richard Aboulafia of Teal Group. 

The global fighter market is worth some $17 billion a year, with after-market and sustainment worth even more, he added.

That market is heating up as stand-offs between the West and Iran and North Korea refocus attention on conventional threats.

A dispute over election results has provoked Iran's biggest and most violent demonstrations since the 1979 Islamic revolution, rocking the oil exporting nation which is also caught up in a dispute with the West over its nuclear programme.

"Nobody knows what will happen in the next few years. Everybody wants deterrents" said a defence industry executive.

The United Arab Emirates is negotiating to buy French Rafales , a Dassault plane seeking its first export order and facing competition from the Lockheed F-16. Oman and Kuwait also seeking firepower, military sources said.

Competitions are also underway in India and Brazil.

Major negotiations with Saudi Arabia are held at government level but the world's largest air show in Paris offers an opportunity to sound out prices, availability and performance.

The Pentagon's top arms sales official was in Paris for the show at the same time as Saudi military representatives, and held a total of more than 40 meetings with foreign delegations.

Boeing meanwhile seeks partners to co-fund development of a proposed new F-15 "Silent Eagle" a stealthier version with special coatings aimed at Asian and Middle East markets.