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December 22, 2005

Al Yamamah 2

Cheering news for BAe shareholders as the Saudis sign up to what is becoming known as Al Yamamah 2. All we need is Euan turningup to sell the concrete forthe runways and we’ve got a close copy of the first time round.

However, is it actually a good deal for us?

Mr Reid said: "BAE Systems, as prime contractor, and its many UK sub-contractors will benefit from the work envisaged under this understanding, which will help sustain several thousand UK jobs over the next 10 years.

"In addition, the associated technology transfer, training and inward investment packages will generate many skilled jobs in Saudi Arabia."

The Saudis are understood to have agreed to buy 48 Typhoon fighters in the initial stages, rising to as many as 72 jets over 10 years. The deal secures 10,000 jobs which rely directly or indirectly on BAE's Eurofighter plant near Preston, Lancashire. Another 4,000 Rolls-Royce jobs were secured because its EJ200 engine is used in the jet.

Appears to be, doesn’t it?

Ah, but, what have we the taxpayers put into the program?  According to the BBC:

The bill for Britain's order of 232 aircraft to replace the RAF's Tornado F3 and Jaguar has risen over the years from £7bn ($10bn) to £15.9bn ($22.7bn).

Which is, I’m afraid, a figure I do not believe. If the Saudis are getting 72 planes for $20 billion then our 232 are going to cost a lot more than $22.7 now aren’t they?

But it is an illustration of how big business gets its snout in the tax money trough all the same. We the taxpayers pay through the nose to develop, at much greater expense than simply buying from the Americans, a plane. When some foreigners buy the plane it’s the shareholders, not the taxpayers, who get the bunce.

It’s not just the Real Nappy Officers sponging off the taxpayers folks!

December 22, 2005 in Business | Permalink


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.....If the Saudis are getting 72 planes for $20 billion then our 232 are going to cost a lot more than $22.7 now aren’t they?.....

Whilst I am sure you are correct there is a service contract involved which is worth a stack of cash and would not be relevant in the case of our Air Force.

On another note, people like yourself are often refered to as pro business (rather than pro market). This post would confuse them.

Tim adds: An important distinction to make, isn’t it.

Posted by: EU Serf | Dec 22, 2005 11:24:29 AM

According to the Guardian, there's no sign that the Saudi's got the three demands they reported back in December:

"that Britain expel two anti-Saudi dissidents from the UK, that an investigation by the Serious Fraud Office into corruption allegations implicating the Saudi royal family be terminated, and that British Airways resume flights to Riyadh.


Posted by: Tom Griffin | Dec 23, 2005 2:55:36 PM

Sorry about the long link. here's a beeter one: http://tinyurl.com/773dv

Posted by: Tom Griffin | Dec 23, 2005 3:01:13 PM