Corrected: U.S. reviewing Mideast arms sales

Reuters News
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Posted: Apr 13, 2011 2:31 PM
Corrected: U.S. reviewing Mideast arms sales

(Corrects April 11 story to show that arms sales to Egypt have not been restricted, as originally stated by a Pentagon official. Corrects paragraphs 3 and 6 of the original story, and deletes paragraphs 4, 7 and 8. The error also appeared in earlier versions of the story.)

By Andrea Shalal-Esa

NATIONAL HARBOR, Maryland (Reuters) - The U.S. government is reviewing arms sales to Middle Eastern countries on a "case-by-case basis" given turmoil in the region, and has already halted some sales, a Pentagon official said on Monday.

Richard Genaille, deputy director of the Pentagon's Defense Security Cooperation Agency, said that two of the biggest deals on the table have been cleared to proceed: a $29.4 billion sale of 84 Boeing Co F-15 fighter jets to Saudi Arabia and a $7 billion sale to the United Arab Emirates of an advanced missile defense system built by Lockheed Martin Corp.

A team of officials from his agency, the State Department, military commanders and the White House National Security Council were carefully reviewing planned arms sales to the region, Genaille told Reuters in an interview after a speech at the annual Navy League conference.

Unrest and violence spreading across the Middle East have sparked questions about U.S. arms sales to the region, deals that many U.S. defense companies had hoped would offset an expected decline in U.S. defense spending in coming years.

Genaille said the current reviews affected specific parts of arms sales that had already been approved by Congress and were being readied for delivery to Middle Eastern countries.

He said other big weapons deals, including a large Boeing helicopter sale to Saudi Arabia, the biggest buyer of U.S. weapons, were still working their way through the congressional notification system.

Gates had delivered a "letter of agreement" to Saudi Arabia for the Boeing F-15 sale during his visit there on April 6, but it had not yet been signed, Genaille said.

A separate deal to modernize Saudi Arabia's eastern naval fleet could be worth more than $20 billion, depending on details still being discussed, Genaille said. That deal has not yet been notified to lawmakers.

The Navy on Friday said Saudi Arabia has asked the United States for prices for surface warships with integrated air and missile defenses, helicopters and other equipment.

Lockheed, which makes a Littoral Combat Ship for the Navy, is expected to compete for the work with Australia's Austal and General Dynamics Corp, which are teamed up to build a separate coastal warship for the Navy.

Earlier, Genaille told the conference that he expected continued strong foreign demand for U.S. weapons, predicting that the overall level of foreign military sales could exceed the currently forecast level of $46 billion in fiscal 2011, which ends on September 30, buoyed by the Saudi arms sales.

The agency that oversees foreign arms sales reported $31.6 billion in new sales in fiscal 2010, according to its website.

The Saudi arms sales are likely to buoy sales in 2011, although the overall level will likely drop off and stabilize between $30 billion and $40 billion for several years.

In October, the Obama administration notified Congress of a proposed arms sale to Saudi Arabia worth up to $60 billion over 15 to 20 years. It would be the largest arms deal on record if all purchases are made, including 84 Boeing F-15 fighter jets and upgrades to 70 more F-15s that the Saudis already have.

The proposed sale also includes three types of helicopters plus 150 Javelin anti-tank guided missiles built by Raytheon Co and Lockheed.

Genaille cited continued foreign demand for Lockheed C-130J transport planes, Boeing C-17 cargo planes, missile defense equipment, unmanned aerial systems, and intelligence and surveillance equipment.

Coast Guard, Navy and Marine Corps officials told executives attending the conference that they also saw strong continued demand for U.S. military and naval equipment.

(Reporting by Andrea Shalal-Esa)