BAE Systems Lands Oman Deal: Corruption and the British Economy

The news that Great Britain has agreed a £2.5bn deal to sell fighter jets to Oman has rightfully been lauded by the government as an important step in Britain’s economic recovery. The deal is set to create thousands of jobs in the UK alone, whilst at the same time protecting existing ones. Oman’s contract with BAE naturally draws parallels with the Al-Yamamah arms deal they have had in place with Saudi Arabia since the 1980s. If that deal is anything to go by, the negotiation of the sale to Oman is likely to have been rife with corruption.

Typhoon Fighter Jets are among the world's most sophisticated aircraft
Typhoon Fighter Jets are among the world’s most sophisticated aircraft

Recently, I wrote on this blog about the importance of David Cameron solidifying ties with the Saudi royal family so as not to jeopardise the Al-Yamamah deal, which has so far brought BAE an estimated £40bn and may do the same in the next twenty years. Cameron clearly succeeded, as the Saudi agreement to buy 72 Typhoon fighter jets a couple of days ago attests to. That being said, the Saudi deal, and now the Omani one, typifies the ongoing problems with the global arms trade.

Firstly, why such big contracts? Do states like Oman, securely ensconced on the Arabian Peninsula, really need to purchase 12 fighter jets? Do the Saudis need another 72 to bolster their already beefed-up air force? The answer is, of course, no. This phenomenon of needless overspending on defence is evident the world over. One need only look at the insane expenditure of the US Defence Department, which successive governments have been loath to trim despite an impending fiscal crisis, for proof of this fact. It is the accumulation of increasingly advanced weapons in increasing quantities for the sake of what?

Firstly, politics. Arms companies are inextricably linked to national governments. In theory, major arms deals can only be made on a bilateral basis between two states. Securing a major arms contract will therefore guarantee a government and their political party loyal patronage from the benefiting arms company, who in turn can act as important political lobbyists in the future. Additionally, major arms deals secure, and create, jobs. This is particularly noteworthy in the current financial climate and in a country like Britain whose manufacturing sector is virtually dead, to the detestation of millions of workers.

Secondly, there are the opportunities provided for personal gain. The Al-Yamamah arms deal is perhaps the most corrupt and fraudulent in history. Billions of pounds have been channeled from the Saudi and British governments and BAE Systems towards well-placed middle-men who help ‘put the deals together’. The expenses are grotesque, illegal and unnecessary. Dodgy offshore accounts, complicit government bureaucrats willing to cover-up the fraud and bankers happy to turn a blind eye allowed a perpetual cycle of illicit payments. A ‘slush fund’ was created whereby Saudi officials with connections to the royal family, and thus influence over the decision of whether to conclude any potential arms deal, were provided with virtually unlimited resources to live a life of indulgence.

Al-Yamamah's biggest beneficiary: Prince Bandar bin Sultan has made over $1bn negotiating the deals
Al-Yamamah’s biggest beneficiary: Prince Bandar bin Sultan has made over $1bn negotiating the deals

Whilst BAE’s role in this corruption ultimately landed it with a £400m fine from the US Department of Justice, such practices are likely to have taken place in the negotiating of the Omani deal. Whilst the economic and political windfalls from such a deal are obvious, and some people may argue the enrichment of middle-men has little effect on their lives, the reality of such deals is far starker.

For a start, the increasing militarisation of the world’s states is not a guarantee to security. Rather, it precipitates a series of regional arms races which, as any neorealist will tell you, can lead to a security dilemma and ultimately war. With the Cold War long ended, demilitarisation should be the name of the game. However, the proliferation of weapons has been startlingly rapid in the new century and it has led to some highly undesirable owners of high-tech munitions. Terrorist groups, insurgents and paramilitary organisations are increasingly likely to be able to attain sophisticated weaponry when states irresponsibly seek to bolster their stocks at every available opportunity. Weapons proliferation is likely to increase the potency of terrorists rather than improve national security.

Additionally, the vast sums of money spent on armaments could surely be better used in improving the lives of ‘ordinary’ people. Indeed, it is the perceived corruption of governments that leads to popular uprisings around the globe. And how often does that lead the world’s richer powers – who dominate the global arms trade – into undesirable action? In a perverse way, the developed world has created many of its own problems through its insatiable armaments commitments.

The majority of heavy weapons belonging to the Syrian Army derive from Russia
The majority of heavy weapons belonging to the Syrian Army derive from Russia

The question comes down to this: is economic gain all-conquering? When most modern-day elections are decided by the economy it probably is. Therefore, we should expect such deals as the Omani jet contract to continue, bringing with them all the hidden dangers and hypocrisies nobody wants you to know about.

For an excellent history of the global arms trade I recommend Andrew Feinstein’s The Shadow World.