The customer is always right

How Britain’s dependence on Saudi arms sales corrupts our politics

Last month, a bombing raid in Yemen by the Saudi-led coalition seeking to restore the government of President Abd Rabbuh Mansur Hadi, struck a funeral, killing 140 civilians. This is the latest in a series of outrages, well-documented by Amnesty International, Human Rights Watch, the United Nations and others, whereby Saudi and allied forces have struck hospitals, schools, market-places and other civilian targets. Saudi-led bombing is believed to be responsible for the majority of civilian deaths in Yemen’s bloody civil war.

Saudi Arabia’s military campaign, as is their armed forces in general, is heavily dependent on arms supplies from the USA and the UK: planes, missiles, bombs, armored vehicles, as well as strategic and logistical support. UK arms giant BAE Systems has 5800 employees in Saudi Arabia, working to support and maintain the Saudi Air Force and Navy.

This latest atrocity has provoked some response from Saudi Arabia’s key suppliers. The US condemned the raid and said that US support for the Kingdom is not a ‘blank check’, while a UK minister more cautiously said that UK arms export licenses to Saudi Arabia were under “careful and continual review”, an oft-repeated formula. Despite describing the carnage at the funeral as “shocking”, the UK government said they had no plans to review their arms sales to Saudi Arabia.

This lack of any condemnation or rebuke from the British is par for the course when it comes to Saudi Arabia. Saudi human rights abuses, both within the Kingdom and now, much more lethally, in Yemen, are typically met with silence, equivocation, and a “see no evil, hear no evil, speak no evil” response.

There is more than one factor behind the UK’s essentially unconditional support for Saudi Arabia. The fact that the country is the world’s single largest oil producer and is seen by the West, including the US and the UK, as a force for stability in the region, is clearly important. But a key reason for the UK’s particularly abject subservience to the Kingdom’s interests and desires is the extreme dependence of the UK arms industry on sales to Saudi Arabia.

According to SIPRI data, 45% of UK exports of major conventional weapons between 2011-2015 were to Saudi Arabia. This probably understates the proportion of the UK arms trade that is with Saudi Arabia, as it does not include the on-the-ground services provided by the above-mentioned 5800 BAE personnel. (The UK government breaks down the total value of arms export orders by region, but not by country). According to the 2015 Annual Report of BAE Systems, by far the UK’s largest arms company, 21% of their 2015 revenue was from sales to Saudi Arabia. Given that a large proportion—at least 40%—of BAE’s revenue comes from their operations in the USA, and to a much lesser extent Australia and Sweden, this means that the Saudi business accounts for clearly over one third of the company’s UK-generated revenue.[1]

The common assumption is that “it’s all about the money”. Of course, for private companies and their shareholders it is. But for the UK economy as a whole, arms exports are of little significance, accounting for less than half of one percent of GDP, and an even smaller proportion of employment.[2] For the UK government, I would argue, it is rather more about the industry; that is, about maintaining what is known as the UK’s “Defence Industrial Base” (DIB).

Almost all major, and even intermediate, military powers, seek to build a domestic arms industry, seeing this as essential to maintaining national autonomy in military affairs. Even those that cannot hope to produce major weapons systems such as combat aircraft, or advanced military technology, may wish at least to be able to support and maintain equipment bought from overseas. The UK is no exception to this, and has one of the largest and most advanced arms industries in the world. Maintaining this has been an important priority of both Labour and Conservative governments over the years—seen as a matter of core strategic interest.

BAE, after a decade and a half of consolidation at the end of the Cold War, stands firmly in the center of the UK DIB. And, as noted, business with Saudi Arabia is a huge chunk of BAE’s business. This is centered on the massive Al Yamamah series of arms deals with Saudi Arabia, worth over £40 billion from the late 1980s to the early 2000s, which included most notably the supply and subsequent support of 120 Tornado combat aircraft. More recently, major contracts have included: a £4.4 billion deal to supply 72 Eurofighter Typhoon aircraft to Saudi in 2007, a £3.4 billion Air Force support contract in 2012, a £1.6 billion deal for 22 Hawk trainer/light combat aircraft also in 2012, a £1.5 billion Tornado aircraft upgrade contract in 2013, and a deal for a further 22 Hawk aircraft in 2016.

Saudi business is also important for other major UK arms companies, such as Rolls Royce, who co-produce the engines that go in Eurofighter Typhoons sold to Saudi Arabia, and other companies such as Cobham and GKN in BAE’s supply chain.

The question for the British government then, is not simply how much profits would fall, or how many jobs would be lost (though that is often the public face of the argument defending the arms trade), but the ability of BAE to maintain production lines and retain key skills and capabilities during the gaps between UK government orders for major systems. Moreover, the strategic priority given to the arms industry affords them a prominent place in the corridors of power, with extensive influence on government policy-making, and a constant ‘revolving door’ between government and industry, as has most recently been documented by Campaign Against Arms Trade’s report on arms industry political influence. Basically, there are strong institutional factors, amplifying the core strategic motivation, against the government doing anything that might jeopardize BAE’s relationship with Saudi Arabia—and by extension, anything that might displease the Saudi regime.

Perhaps the most brazen example of this was in December 2006, when the government of Tony Blair forced the cancellation of a Serious Fraud Office investigation into corruption in the Al Yamamah deals. The official excuse, that the Saudis had threatened to break off anti-terror intelligence cooperation, leading to “blood on the streets” of Britain[3] was paper-thin; given that, as an appeal court judge pointed out, no attempt was made to find an alternative to abandoning a judicial process in response to this blatant threat of terrorism. A far more plausible reason is that the Saudis had also threatened to pull the plug on further arms deals, specifically the “Al Salam” deal for Typhoon aircraft that was sealed the following year.

The evidence of corruption in the Al Yamamah deals is extremely strong, and well-documented by The Guardian newspaper in particular, with extensive records of a network of offshore shell companies used to transfer as much as a billion pounds in bribes to top Saudi Prince Bandar and other key members of the House of Saud involved in the deals. Successive UK governments, who negotiated the deals directly with the Saudis, can scarcely have been unaware that such ‘inducements’ were a key part of the process.

The decision to cancel the SFO investigation caused massive controversy domestically and abroad. It was almost overturned in a judicial review, with both the High Court and Court of Appeal declaring the decision to be illegal, before this verdict was finally overturned by the House of Lords.

Internationally, the cancellation of the investigation was severely criticized by the Organization for Economic Cooperation and Development (OECD), as being in breach of an OECD convention on bribery to which the UK was a signatory. The affair severely damaged the UK’s reputation for anti-corruption efforts internationally. But the Blair government considered this a price well worth paying to maintain the ‘special relationship’ between the UK arms industry and the House of Saud.

Much earlier, in 1992, a National Audit Office report into allegations of corruption in the Al Yamamah deal became the only such report in the organization’s history to be suppressed, kept secret from the British public and—with the exception of the Chairman of the Public Accounts Committee—from Parliament.

Taking us back to Yemen, this special relationship also effectively exempts deals with Saudi Arabia from the UK’s arms export controls, which the government likes to boast (extremely dubiously) are the toughest in the world. Neither Saudi Arabia’s brutal record of human rights abuses or denial of the rights of women has any bearing, nor the massive corruption involved in the deals, nor the terrible human toll of their campaign in Yemen, present any obstacles to the UK continuing to permit—and indeed encourage—arms transfers to Saudi.

The UK’s export licensing criteria, which reflect the European Union’s Common Position on arms exports, do not per se forbid arms transfers to countries on the basis of their human rights record, or even their involvement in war crimes. Rather, each potential arms export is evaluated on a case-by-case basis relating to the equipment being transferred as well as the end user. The criteria do, however, forbid transfers of equipment where there is a ‘clear risk’ that it may be used to commit human rights abuses or violations of international humanitarian law (i.e. the ‘laws of war’), or where it would provoke or prolong internal armed conflict. Moreover, the UK has been an enthusiastic supporter of the Arms Trade Treaty, signed in 2013, which contains similar provisions.

The evidence that UK weapons are in fact being so used by Saudi in Yemen is, however, overwhelming. The Saudi Air Force, which leads the bombing campaign, is composed entirely of US and UK-supplied planes, and UK Tornado and Typhoon aircraft are playing a central role in the campaign. Meanwhile a leaked UN report earlier in 2016 provided evidence of 119 separate incidents of violations of IHL by the Saudi-led bombing campaign. Moreover, in May 2016 Amnesty International published evidence that fragments of British-made BL-755 cluster munitions had been found in the aftermath of a coalition air strike. The BL-755 is designed to be dropped from a Tornado aircraft, sold by BAE to Saudi Arabia as part of Al Yamamah.

As a result of these developments, the government’s arms sales to Saudi Arabia are now the subject of a judicial review, successfully sought by the UK NGO Campaign Against Arms Trade. Two Parliamentary Select Committees have called for a suspension of arms sales to Saudi Arabia.

The government’s response has been to blindly maintain that they are following their export licensing criteria, and that the threshold for denying licenses—though this merely requires that there is a ‘serious risk’ that equipment may be misused—has not been met.However, they have been forced to change their story to Parliament; having previously claimed to have investigated reported violations by Saudi Arabia, and found no evidence, they quietly corrected this in July, stating instead that they had not been able to assess such claims. It is not hard to read between the lines that they have studiously avoided assessing such claims, but have rather done all they can to avoid exposing themselves to evidence that would require them to halt the arms sales.

Thus, in the cause of continuing arms sales to Saudi Arabia, the UK is willing to squander its international reputation on anti-corruption, to violate the same Arms Trade Treaty that it so ardently promoted, and to appear as blatantly hypocritical in its (rightful) condemnation of Syria and Russia’s bombing of Aleppo, while actively supporting and facilitating Saudi bombing of Yemen.

The irony is that, in order to maintain strategic autonomy through the preservation of the domestic arms industry, the UK has sacrificed much of its autonomy in foreign policy, bending all other goals and interests to those of its number one foreign buyer. It is often claimed that arms exports give the seller leverage over the buyer; but in the UK’s relationship with Saudi Arabia, it is the opposite: the customer is always right.

[1] This includes the turnover from support operations in Saudi itself, which are linked to sales of UK-manufactured equipment.

[2] Forthcoming report by the author, “Special treatment: UK government support for the arms industry and trade”, Campaign Against Arms Trade/SIPRI, October 2016.

[3] See e.g. Andrew Feinstein “The Shadow World: inside the global arms trade”, Penguin, 2012.

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