Saudi Arabia and US in talks on billions in arms sales

Washington is working to push through contracts for tens of billions of dollars in arms sales to Saudi Arabia, some new, others in the pipeline, ahead of President Donald Trump's trip to the kingdom this month, sources familiar with the talks told Reuters this week.

Saudi Arabia is Trump's first stop on his maiden international trip, a sign of his intent to reinforce ties with a top regional ally.

The United States has been the main supplier for most Saudi military needs in recent years, from F-15 fighter jets to command-and-control systems worth tens of billions of dollars. Trump has vowed to stimulate the US economy by boosting manufacturing jobs.

Washington and Riyadh are eager to improve relations strained under former president Barack Obama in part because of his championing of a nuclear deal with Saudi arch-foe Iran.

Lockheed Martin products in the package include a Terminal High Altitude Area Defense (THAAD) missile defence system with several batteries, the sources said. The THAAD system, like one now being made operational in South Korea, costs about $1bn.

Also being negotiated is a C2BMC software system for battle command-and-control and communications, and a package of satellite capabilities, both provided by Lockheed.

The sources spoke on condition of anonymity because they were not authorised to discuss the negotiations, which also include previously reported contracts or items under discussion for years.

One such deal, an $11.5bn package of four multi-mission surface combatant ships and accompanying services and spare parts, was approved by the State Department in 2015. Talks followed to hammer out capabilities, configuration and design for the complex warships, but the deal has never gone to final contract.

The next step for the ships may be a letter of agreement between the two countries, the sources said.

Versions of the ship used by the US Navy, the Littoral Combat Ship, are built by Bethesda, Maryland-based weapons maker Lockheed and Australia's Austal. If a deal goes through, it would be the first sale of a new small surface warship to a foreign power in decades.

Any major foreign weapons sale is subject to oversight by Congress. Lawmakers must take into consideration a legal requirement that Israel must maintain a qualitative military edge over its neighbours.

Also, more than $1bn worth of munitions, including armour-piercing Penetrator Warheads and Paveway laser-guided bombs made by Raytheon, are included in the package, the sources said.

The Obama administration suspended the planned sale because of concerns over the Saudi-led military campaign in Yemen and civilian casualties.

A US administration official said the proposed Raytheon sale was still undergoing inter-agency review.

A Raytheon representative declined to comment on the sales.

A Lockheed representative said such sales are government-to-government decisions and the status of any potential discussions can be best addressed by the US government.

A representative for the Saudi embassy in Washington declined to comment.

One of the people with knowledge of the sales said that as planning for Trump's trip to Saudi Arabia intensified in recent weeks, the arms negotiations also accelerated.

Two US officials said a US-Saudi working group met at the White House on Monday and Tuesday to negotiate the trip as well as financing for military equipment sales and stopping militant financing.

Saudi Foreign Minister Adel al-Jubeir and other Saudi officials met with lawmakers at the Capitol on Thursday, including senators Bob Corker and Ben Cardin of the foreign relations committee.

The Pentagon declined to comment. White House and State Department officials said it was US policy not to comment on proposed US defense sales until they had been formally notified to Congress.

The Obama administration had offered Saudi Arabia more than $115bn in weapons. Most of the Obama-era offers, which are reported to Congress, became formal agreements, though some were abandoned or amended.