More on the Israeli Georgia connection

Israeli Arms Sales to Georgia Raise New Concerns

by Peter Hirschberg

JERUSALEM - With the eruption of fighting between Russia and Georgia, Israel has found itself in an awkward position as a result of its arms sales to Georgia, caught between its friendly relations with Georgia and its fear that the continued sale of weaponry will spark Russian retribution in the form of increased arms sales to Iran and Syria. After fighting broke out late last week between Georgia and Russia over the breakaway provinces of South Ossetia and Abkhazia, Israel's foreign ministry over the weekend recommended suspending the sale of all weapons and defense-related equipment to Georgia, the daily Ha'aretz newspaper reported. The paper quoted an unnamed senior official saying that Israel needed "to be very careful and sensitive these days. The Russians are selling many arms to Iran and Syria, and there is no need to offer them an excuse to sell even more advanced weapons." Israel's immediate concern is that Russia will proceed with the sale of the S-300 anti-aircraft missile system to Iran, which would help it defend its nuclear installations from aerial attack. Israel, like the U.S., believes that Iran's nuclear program is aimed at developing a bomb, and Israeli leaders have refused to rule out the possibility of a preemptive strike aimed at derailing Iran's nuclear aspirations. Israel recently conducted a major aerial exercise over the eastern Mediterranean and Greece that was widely viewed as a rehearsal for a possible strike against Iran's nuclear installations. But with the U.S. and Europe resorting to diplomatic pressure in the form of sanctions to deter Iran, Israel is loathe to anger Russia, which until now has opposed harsher sanctions on Tehran. Israel's relations with Georgia have been close, partly because there is a large Georgian Jewish community in Israel. In recent years, ties have also taken on a military dimension, with military industries in Israel supplying Georgia with some $200 million worth of equipment since 2000. This has included remotely piloted planes, rockets, night-vision equipment, other electronic systems, and training by former senior Israeli officers. "Israel should be proud of its military, which trained Georgian soldiers," Georgian Minister Temur Yakobashvili, who is Jewish, told Israel's Army Radio in Hebrew shortly after the fighting erupted. Israel is not a major supplier of arms to Georgia, with the U.S. and France supplying Tbilisi with most of its weaponry. But the arms transfers have attracted media attention partly because of the role played by some high-profile Israeli figures, including former Tel Aviv mayor Roni Milo, who conducted business in Georgia on behalf of Israel Military Industries. According to media reports, Brig. Gen. Gal Hirsch, a senior commander in the 2006 Lebanon war who resigned after the release of a highly critical report on the way the war was conducted, served as an adviser to Georgian security forces. Further attention was drawn to the Israel-Georgia arms trade earlier this year when a Russian jet shot down an Israeli-made drone being operated by the Georgians. Even though weapons transfers were modest in scope, Russian diplomats began increasingly relaying to Israel their annoyance over its military aid to Georgia, including the special forces training provided by security experts. Israel decided about a year ago to limit military exports to defensive equipment and training. New contracts weren't approved as the arms sales were scaled back. Georgia's request for 200 advanced Israeli-made Merkava tanks, for example, was turned down. There were reports in Israel that the sale of the tanks didn't go through because of a disagreement over the commission that was to be paid as part of the deal. But Amos Yaron, the former director-general of the defense ministry, insisted it had to do with "security-diplomatic considerations" – a clear reference to the sensitivity of the arms sales to Georgia. Israel, Yaron added, didn't want "to harm Russian interests too much." Asked about the motivation to initially engage in the sale of weaponry to Georgia despite concerns it might anger Russia, Yaron replied: "We did see that there was potential for a conflagration in the region but Georgia is a friendly state, it's supported by the U.S., and so it was difficult to refuse." Original article posted here.

US losing even on defense contracts.

Russia forces USA out from its traditional arms markets

Russia forces the USA out from the traditional arms market. Russia has won a 4-billion-dollar contract with Saudi Arabia in a competition with the USA and France. This achievement of the Russian defense complex can be explained by both the high quality of the national military hardware defense equipment and the blunders of its Western competitors. However, Russia should not rest on its laurels: the current state of the nation’s defense industry is not good enough. It is not ruled out that the contract with Saudi Arabia may repeat the unfortunate fate of MiG supplies to Algeria.

Russia has entered the market area which has traditionally been under the USA’s control. In this case it goes about Saudi Arabia. Rumors of Russia’s intention to sign a multi-billion-dollar contract with the country appeared in November of 2007 when then-President Vladimir Putin met with the Saudi Crown Prince Sultan bin Abdul Aziz Al Saud. On the eve of the meeting Putin toured Arab states, and visited Arab capital Riyadh where none of Russian and Soviet leaders had been before.

The West considered it a newspaper hoax, because Saudi Arabia was totally dependant on arms supplies from the West – presumably from the USA. More importantly, the country has not voiced a desire to change the supplier. However, Russia and Saudi Arabia preferred not to reveal details of their talks on the contract, which continued for about six months.

Now it is known that the contract is evaluated at four billion dollars. The Saudi king got interested in the wide range of Russia’s defense equipment: from aircraft and armored vehicles and missile complexes. It became known that a half of the contract accounts for 100 Mil helicopters (mainly, Mi-17 and Mi-35). Half a billion dollars accounts for 150 T-90C tanks. The contract also includes 20 middle-haul air defense systems Buk-M2E and several hundreds of BMP-3 infantry combat vehicles.

Why did Riyadh prefer Russia to the USA in terms of the military hardware? Saudi Arabia has been under strong influence of the USA and the UK for decades. It was caused by the struggle between the USSR and the West for influence areas, including the Middle East. Saudi kings saw a threat to their power from the USSR that tried to develop socialist regimes in Arab states. The state of affairs is different now. The Soviet Union broke up, which gave Saudi Arabia an opportunity to negotiate and cooperate with Russia.

Speak the truth and shame the devil on Pravda.ru forum

It is worthy of note that Russian weapons have been attractive to foreign buyers from the point of view of price and quality combination. Russia used to make arms shipments to other Gulf States such as the United Arab Emirates and Kuwait before. Experts say that Russian military vehicles showed better technical qualities than their Western analogues, which made Saudi Arabia evince great interest in Russian products.

However, the better quality of Russia’s defense equipment in comparison with US analogues was demonstrated during the 1991 Operation Desert Storm. At that time most countries, including those possessing Soviet arms, joined the anti-Iraqi coalition. Syrian T-72 tanks successfully covered longer distances than USA Abrams tanks that broke down because of overheating and sand. That is only one of such episodes.

It is clear that such incidents did not make US arms more authoritative. In addition, last year the US Senate deprecated the deal with Saudi Arabia, according to which it was to obtain a set of high-precision bombs. The US administration believed that the bombs could fall into terrorists’ hands. Thus, Riyadh tried to find another supplier. They arranged the supply of helicopters and tanks with the French, but France demanded to extend the contract and to include Navy ships in it. However, Saudi Arabia did not like such impudence and apparently decided to punish France by signing a contract with Russia.

The contract evidences Russia’s success, but now the USA has nothing to worry about. Russia’s deal with Saudi Arabia is just a pinprick to them. For the time being, the Russian defense industry is a goose that lays golden eggs, but they are of poor quality. Russia should not forget that Saudi Arabia will not stand such treatment and in case of malfunction it will come back to the USA.

It is important for Russia at this juncture to save the reputation of a credible supplier. Urgent measures are necessary to improve the state of the Russian defense industry. In fact, it is the only branch of Russia’s industry that produces competitive goods on the world market. Young people do not want to engage in the defense industry because of low salaries.

Original article posted here.

Yet another failing policy by the merchants of death

Arms sales: How the US is not winning friends

By Zia Mian

The United States sells death and destruction as a fundamental instrument of its foreign policy. It sees arms sales as a way of making and keeping strategic friends and tying countries more directly to US military planning and operations.

At its simplest, as Lt Gen Jeffrey B Kohler, director of the Defense Security Cooperation Agency, told the New York Times in 2006, the United States likes arms deals because “it gives us access and influence and builds friendships”. South Asia has been an important arena for this effort, and it teaches some lessons the United States should not ignore.

A recent Congressional Research Service report on international arms sales records that last year the United States delivered nearly $8 billion worth of weapons to Third World countries. This was about 40% of all such arms transfers. The US also signed agreements to sell over $10 billion worth of weapons, one-third of all arms deals with Third World countries.

It is easy to put this in perspective: $10 billon a year is the estimated cost of meeting the UN Millennium Development Goal for water and sanitation, which would reduce by half the proportion of people in the world without proper access to drinking water and basic sanitation by 2015. Today, about 1.1 billion people do not have access to a minimal amount of clean water and about 2.6 billion people do not have access to basic sanitation.

The scale of recent US arms sales should not be news. The US sold over $61 billion worth of weapons to Third World countries from 1999-2006, making it by far the leading international supplier. Russia, the second largest arms dealer, managed to sell less than half as much.

Arms vs influence in Pakistan
The largest Third World buyer of weapons in 2006 was Pakistan. It purchased just over $5 billion in arms. Almost $3 billion of its purchases were new US-made F-16 fighter jets, upgrades to the F-16s Pakistan bought in the 1980s, and bombs and missiles to arm these planes. A White House press spokesman explained that the sale of the jet fighters “demonstrates our commitment to a long-term relationship with Pakistan”.

The use of arms sales to show commitment to Pakistan has gone on for over 50 years. The United States used military aid to recruit and arm Pakistan as an ally in the Cold War. A great fear, as a 1953 State Department memorandum pointed out, was “a noticeable increase in the activities of the mullahs in Pakistan. There was reason to believe that in face of growing doubts as to whether Pakistan had any real friends, more and more Pakistanis were turning to the mullahs for guidance. Were this trend to continue the present government of enlightened and Western-oriented leaders might well be threatened, and members of a successive government would probably be far less cooperative with the West than the present incumbents.” This memo could have been written today.

The United States has failed to learn that paying Pakistan’s military bills demonstrates commitment and friendship only to Pakistan’s military. It does nothing for Pakistan’s people. The US supported General Ayub Khan, Pakistan’s first military leader, for a decade (1958-1969), at great cost. He was brought down by a tide of public protest.

The United States also supported General Zia ul-Haq (who ruled from 1977 to 1988), once he agreed to help in the war against the Soviet occupation of Afghanistan. Washington gave Zia a $3.2 billion aid package in 1982 and promised another $4 billion in 1988. This generosity bought precious little. Pakistan’s government took the money and used it buy weapons from the United States, built nuclear weapons, and promoted radical Islamists at home and in Afghanistan. The consequences are all around us today.

Since September 11, 2001, the United States has given over $10 billion to Pakistan to buy or reward President General Pervez Musharraf’s support for its newest war, the “war on terror”. Pakistan has spent over $1.5 billion of this amount on buying new weapons. To understand the scale of this aid, consider Pakistan’s total military budget in 2006, estimated at about $4.5 billion. The United States is now giving Pakistan aid to pay for the new deal for F-16s, bombs, and missiles. It is likely to win few friends.

There is little doubt today about how unpopular the United States is in Pakistan. A Pew poll released in September 2006 found that in Pakistan, the United States is viewed less favorably even than India (with which Pakistan has fought four wars). Just over 25% were favorable toward the United States, compared to one-third who felt that way toward India.

Attitudes toward the United States have worsened. A 2007 poll found that only 15% of Pakistanis had a favorable attitude towards the United States. An August 2007 poll found that Musharraf was less popular even than Osama bin Laden; Musharraf had the support of 38% of Pakistanis, bin Laden of 46%, and President George W Bush found favor with only 9%. It is hard to imagine a more damning indictment of a policy that sought to make friends and build support.

This hostility toward the United States will only get worse as it is seen to support Musharraf’s efforts to remain president of Pakistan.

Strategic relationship with India
India, Pakistan’s neighbor, historic rival, and often bitter enemy, is the second largest buyer of weapons in the Third World. It signed up for $3.5 billion worth of weapons in 2006. It is now responsible for about 12% of all arms purchases in the Third World. India has traditionally bought Russian weapons, but is now interested in what others, especially the United States, has to offer.

India may spend some $40 billion on weapons purchases over the next five years. High on the list is a contract for 126 jet fighters, with a possible price tag of over $10 billion. A State Department official announced that the government will try to help win the order for a US company. US arms manufacturers are already lining up. Richard G Kirkland, Lockheed Martin’s president for South Asia, has claimed that “India is our top market” when it come to “potential for growth”. The president of Raytheon Asia, Walter F Doran, claims India may be “one of our largest, if not our largest, growth partner over the next decade or so”.

There is good reason for US confidence. In 2005, the defense secretaries of the United States and India signed the “New Framework for the US-India Defense Relationship”. The framework “charts a course for the US-India defense relationship for the next 10 years” and “will support, and will be an element of, the broader US-India strategic partnership”. It includes a commitment to “expand two-way defense trade”. These arms deals, the framework statement claims, should be seen “not solely as ends in and of themselves, but as a means to strengthen our countries' security, reinforce our strategic partnership, achieve greater interaction between our armed forces, and build greater understanding between our defense establishments”.

More arms, less influence
As with Pakistan, these arms sales may not buy the United States the influence it seeks in India. The US-India nuclear deal offers an example of how things may play out. In 2005, the United States and India agreed on a deal to exempt India from the 30-year-old US laws that prevent states from using commercial imports of nuclear technology and fuel to aid their nuclear weapons ambitions. In 2006, Congress approved and President Bush signed legislation lifting the curbs on nuclear trade with India. The two countries have been negotiating a nuclear cooperation agreement over the past year.

The clearest exposition of what the United States wants in exchange came in testimony to Congress in support of the US-India nuclear deal by Ashton Carter, who served as assistant secretary of defense in the Clinton administration, and in a 2006 article, "America’s New Strategic Partner?" in the journal Foreign Affairs. He argued that Washington needed India’s help against Iranian nukes, in future conflicts with Pakistan, and as a counterweight to China. He noted there were “more direct benefits”, which include “the intensification of military-to-military contacts” and “the cooperation of India in disaster-relief efforts, humanitarian interventions, peacekeeping missions, and post-conflict reconstruction efforts”, and “operations not mandated by or commanded by the United Nations, operations in which India has historically refused to participate”.

And finally, Carter offered the real kicker, “US military forces may also seek access to strategic locations through Indian territory and perhaps basing rights there. Ultimately, India could even provide US forces with ‘over-the-horizon’ bases for contingencies in the Middle East.”

Carter recognized that there are other interests too, which others might put higher on the list. He acknowledged that “on the economic front, as India expands its civilian nuclear capacity and modernizes its military, the United States stands to gain preferential treatment for US industries”.

The process of putting pressure on India to deliver has already begun. In May 2007, key members of the US Congress wrote a letter to the Indian prime minister warning that they were “deeply concerned” by India’s relationship with Iran, and that if India did not address this then there was “the potential to seriously harm prospects for the establishment of the global partnership between the United States and India”. In short, India was being told to choose: Iran or the United States and the nuclear deal.

However, the past few weeks have seen a growing crisis in India over the nuclear deal and how close India should get to the United States. India’s communist parties, which are part of the Congress Party-led coalition government, have demanded a halt to the US-India nuclear deal to give the country time to work out its implications for Indian foreign policy. Their fear is that the deal will give the US influence over Indian decision-making. They have threatened to bring down India’s government.

India’s progressive social movements have also opposed the nuclear deal. They worry that “directly or indirectly, the United States will also enter the Indian sub-continent, to manage intra-regional, inter-country relations”. They see it as “not just anti-democratic but against peace, and against environmentally sustainable energy generation and self-reliant economic development”. These basic concerns about democracy, peace, sustainability, and independence, are what will put India at odds with US policy, no matter how many weapons it offers to sell.

Zia Mian is a physicist with the Program on Science and Global Security at the Woodrow Wilson School of Public and International Affairs at Princeton University and a columnist for Foreign Policy In Focus (online at www.fpif.org).


Original article posted here.

Iran, Nicaragua, Drugs, Arms, Detention Camps and the seeds of weeds now grown

Peace Propaganda, but Promoting War and Profits

US has been covertly arming Gulf States since 2004, officials say

Larisa Alexandrovna

$20b arms sale to Saudi Arabia ‘done deal’

A recently disclosed US agreement with Saudi Arabia for a 10-year, $20 billion dollar arms sale is a “done deal,” according to intelligence officials and experts familiar with the negotiations.

Yesterday, Secretary of State Condoleezza Rice and Secretary of Defense Robert Gates made a rare joint visit to Saudi Arabia to meet with members of the monarchy, as well as representatives of other Gulf States including the United Arab Emirates, to discuss a $20 billion dollar arms deal to deliver weapons, training, and weapons systems upgrades to Saudi Arabia over the next ten years. Although officially the meeting is to negotiate an agreement, sources have confirmed to RAW STORY that the deal has already been approved.

“It is a done deal. Everyone who needed to has already signed off,” said a former National Security Council official, who wished to remain anonymous given the security aspects of the topic. The deal also includes massive aid packages to Egypt and Israel, which have not yet been formally announced.

Arming the Gulf states

According to current and former intelligence officials, however, the Bush administration has been arming Gulf Cooperation Council (GCC) states covertly since “at least” 2004, a year after the US-led invasion of Iraq in March of 2003.

The GCC is a union of regional allies, including Saudi Arabia, Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates. Created in 1981, it is similar in structure and purpose to the European Union.

Using backchannels and corporate partners, arms have been furnished to the Gulf states to beef up security against what the US sees as an increased risk posed by Iran. Along with sharing various resources, GCC members have agreed to jointly combine military forces.

According to the NSC official, the current Saudi deal serves two purposes, both of which are a direct result of the US-led war against Iraq and the regional instability it has caused. One is to support the Saudi rulers, while the other is to isolate Iran.

The most pressing concern for the Saudi royal family is their ability to maintain power. The Saudi royal family, who are Sunnis, see the election of Shi’a Muslim Nouri al-Maliki as Iraqi Prime Minister as a signal that the Shi’a state of Iran could become more powerful and threaten the sovereignty of the House of Saud. Beyond that, the royals also fear that their own people might overthrow the monarchy should instability in the region continue to worsen.

“The Saudis see Maliki as the cat’s paw of Iran and they think we are actively supporting Maliki,” the NSC official said. “What the monarchy is actively worried about is that guys who got bloodied in Iraq will return home and overthrow them, and that would be very bad for us.”

Not everyone agrees.

In an email to RAW STORY Wednesday, Lawrence Wilkerson, former chief of staff to Secretary of State Colin Powell, said he believes the deal is unwise.

“I believe that the $20B arms package just announced – and the diplomacy accompanying it – is a complete refutation of the Bush/Rice policy of refusing to coddle the autocracies of the Middle East,” Wilkerson said. “Because we are afraid of Tehran, we are willing to fund massively regimes whose interests are not only counter to our own but who are actively engaged in covertly undermining U.S. interests, from supporting anti-U.S. elements in Iraq to building and funding thousands of madrassas in volatile places like the Federally Administered Territories in Pakistan.”

Since 1990, Saudi Arabia has spent over $39.6 billion in arming itself against both the threat of Iran and the growing likelihood of a domestic uprising. The US has also given $300 million more in arms during that period through the State Department, making that nation the single largest client of US defense contractors.

Bribing the House of Saud?

Several military and intelligence sources say that the other major impetus behind the arms deal is the Bush administration’s focus on destabilizing and isolating Iran. Part of that strategy involves cutting Iran off from dealing with companies that also have business dealing with Saudi Arabia and, at the same time, protecting Saudi Arabia from any fallout over US activities against Iran. According to the Washington Post, separate arms deals have also been approved for both Israel and Egypt to “strengthen pro-Western countries against Iran at a time when the hard-line regime seeks to extend its power in the region.”

Another motivation for the arms deal is the Bush administration’s need for support to curb the democratically elected Maliki’s influence while at the same time demonstrating “good faith” to the Saudis, who have increasingly become disillusioned with US policy in Iraq and mishandling of the Iraq war.

“There is a real fear that the [Saudi monarchy] will move towards France and Britain,” said the NSC official. A military official pointed out that with the increase in Asian demand for Saudi Arabia’s largest export, oil, the Arab nation now has more leeway to break away from its long-standing relationship with the United States.

Wilkerson points out, however, that the deal prioritizes aid to just three countries.

“By this recently-announced policy, we have effectively committed more than 80% of U.S. strategic aid to three countries – Israel, Egypt, and Saudi Arabia – all of whom are acting in ways fundamentally counter to our interests,” he said. “In my view, we are doing this in a futile and desperate attempt to ‘buy’ their assistance with respect to Iraq, as well as an attempt to enlist their efforts in countering Iran – the latter of which they would do anyway, even without our aid.”

“This is quintessentially a diplomacy of fear and desperation and not of wisdom and confidence,” he added.

The events of Sept. 11, 2001, when 19 men – 15 of them from Saudi Arabia – attacked the United States, do not seem to have had much effect on US interest in arming the Saudis.

When asked about this, one intelligence official said, “It was 14 or 15 guys, not the government of Saudi Arabia.”

Yet there is evidence that the Saudis have transferred or sold US arms to unauthorized partners.

During the 1980-88 Iran-Iraq war, the Saudis allegedly gave Iraq 1,500 US 2,000-pound bombs (Los Angeles Times, 14 September 1992). "Inadvertent" transfers of bombs and vehicles to Syria and Bangladesh during the Gulf War have also been reported (Arms Control Today, May 1992), as well as another that almost took place when an asylum-seeking Saudi F-15 pilot flew his aircraft to Sudan in November 1990. The plane was returned (Washington Post, 15 November 1990).

Deal with Northrop Grumman alleged

A former high level State Department official pointed to at least one company that is providing weapons to the Saudi National Guard: Northrop Grumman subsidiary Vinnell Corporation.

“The Vinnell Corp has been in that business for decades,” said this official.

The defense giant Northrop Grumman was in talks with the Saudis in March of this year to sell them their E-2D Hawkeye 2000, a form of early air warning system.

Vinnell is also the quasi-official security training firm for the Saudis, through a joint Saudi-US enterprise called Vinnell Arabia.

Yet another offshoot of Northrop is Vinnell-Brown & Root, which is a joint venture between Northrop Grumman and Halliburton, the controversial company of which Vice President Cheney was the CEO until the 2000 election.

Vinnell-Brown & Root is also involved in training the Saudi National Guard.

One source familiar with the backchannel sales of weapons to the GCC states said there is a connection between the leadership of the 3rd Infantry Division of the US Army, from Fort Stewart Georgia, and Vinnell Corporation, but would not elaborate.

In April 2006, Robert Joseph, undersecretary of state for arms control and international security, visited the GCC states in an attempt to broker a deal to install a missile defense system aimed against Iran.

While the arms list for the current deal is still shrouded in secrecy, if former deals are any indication, the Saudis will receive high caliber weapons that are top-of the line “system deployed with U.S. forces,” including M-1A2 Abrams main battle tanks, M-2A2 Bradley armored vehicles, F-15E Strike Eagle attack aircraft and Patriot surface-to-air missiles.

Saudis worry about Iraq fighters coming back

The greatest number of foreign fighters in Iraq are Saudi Arabs, making up roughly 45 percent of all foreign militants. Though not allied with any specific terrorist group, some Saudis are loosely affiliated with Al Qaeda; most, however, are simply fighting the Shi’a government of Iraq, which they perceive as a threat, as well as the US-led coalition, which they see as an even greater concern.

The result of this influx of foreign fighters and pervasive anti-Western sentiments has been a catastrophic radicalization of Muslims in general and Saudi Arabs in particular.

Such fighters, notes the former NSC official, have been radicalized and trained on the streets of Anbar province, and those who might return home to overthrow the Saudi monarchy will be that much more capable.

The Saudi monarchy only came into existence in 1932 and has owed its survival to the United States at every point since. By 1933, US oil interests had already offered $170,000 in gold for land concessions. In 1945 the US and King Abd al-Aziz agreed to a deal in which the US would provides military security to the regime in exchange for cheap oil and exclusive rights provided to US oil companies. Since 1945 the House of Saud has depended almost entirely on the military support of the US government, which has continued to provide arms and training to the Saudi National Guard, a praetorian-like special force that is responsible for the protection of the royal family from coup attempts, assassination attempts, and uprisings by its own people.

Larisa Alexandrovna is the Managing Editor-Investigative News for Raw Story. She is also the site's intelligence and national security correspondent.

Muriel Kane contributed to the research for this article.

Original article posted here.

Another Decade in Empires: Cronies, Colonies, Weapons and Bribes

BAE accused of secretly paying £1bn to Saudi prince ·

Money moved via US bank
· £30m payments a quarter
· Sanctioned by MoD

David Leigh and Rob Evans
Thursday June 7, 2007
The Guardian

Prince Bandar bin Sultan bin Abdul Aziz al-Saud. Photograph: AFP/Getty Images

The arms company BAE secretly paid Prince Bandar of Saudi Arabia more than £1bn in connection with Britain's biggest ever weapons contract, it is alleged today.

A series of payments from the British firm was allegedly channelled through a US bank in Washington to an account controlled by one of the most colourful members of the Saudi ruling clan, who spent 20 years as their ambassador in the US.

It is claimed that payments of £30m were paid to Prince Bandar every quarter for at least 10 years.

It is alleged by insider legal sources that the money was paid to Prince Bandar with the knowledge and authorisation of Ministry of Defence officials under the Blair government and its predecessors. For more than 20 years, ministers have claimed they knew nothing of secret commissions, which were outlawed by Britain in 2002.

An inquiry by the Serious Fraud Office (SFO) into the transactions behind the £43bn Al-Yamamah arms deal, which was signed in 1985, is understood to have uncovered details of the payments to Prince Bandar.

But the investigation was halted last December by the SFO after a review by the attorney general, Lord Goldsmith.

He said it was in Britain's national interest to halt the investigation, and that there was little prospect of achieving convictions.

Tony Blair said he took "full responsibility" for the decision.

However, according to those familiar with the discussions at the time, Lord Goldsmith had warned colleagues that British "government complicity" was in danger of being revealed unless the SFO's corruption inquiries were stopped.

The abandonment of the investigation provoked an outcry from anti-corruption campaigners, and led to the world's official bribery watchdog, the OECD, launching its own investigation.

The fresh allegations may also cause BAE problems in America, where corrupt payments to foreign politicians have been outlawed since 1977.

The allegations of payments to Prince Bandar is bound to ignite fresh controversy over the original deal and the aborted SFO investigation.

The Saudi diplomat is known to have played a key role with Mrs Thatcher in setting up Britain's biggest ever series of weapons deals.

For more than 20 years Al-Yamamah, Arabic for "dove", has involved the sale of 120 Tornado aircraft, Hawk warplanes and other military equipment.

According to legal sources familiar with the records, BAE Systems made cash transfers to Prince Bandar every three months for 10 years or more.

BAE drew the money from a confidential account held at the Bank of England that had been set up to facilitate the Al-Yamamah deal. Up to £2bn a year was deposited in the accounts as part of a complex arrangement allowing Saudi oil to be sold in return for shipments of Tornado aircraft and other arms.

Both BAE and the government's arms sales department, the Defence Export Services Organisation (Deso), allegedly had drawing rights on the funds, which were held in a special Ministry of Defence account run by the government banker, the paymaster general.

Those close to Deso say regular payments were drawn down by BAE and despatched to Prince Bandar's account at Riggs bank in Washington DC.

Under the terms of a previously unknown MoD instruction from the department's permanent secretary, Sir Frank Cooper, the payment deal would have required Deso authorisation.

The money was not characterised as commission, but as quasi-official fees for marketing services. The payments are alleged to have continued for at least 10 years and beyond 2002, when Britain outlawed corrupt payments to overseas officials.

SFO investigators led by assistant director Helen Garlick first stumbled on the alleged payments, according to legal sources, when they unearthed highly classified documents at the MoD during their three-year investigation.

Before the investigation was abandoned, the SFO interviewed Alan Garwood, head of Deso. Sources close to the arms sales unit say that he and Stephen Pollard, the commercial director of the Saudi project, were questioned about the reasons for authorising the payments.

Prince Bandar, currently head of the country's national security council, was asked about the alleged payments by the Guardian this week.

He did not respond.

BAE Systems also would not explain the alleged payments. The company said: "Your approach is in common with that of the least responsible elements of the media - that is to assume BAE Systems' guilt in complete ignorance of the facts."

Its spokesman, John Neilson, added: "We have little doubt that among the reasons the attorney general considered the case was doomed was the fact that we acted in accordance with ... the relevant contracts, with the approval of the government of Saudi Arabia, together with, where relevant, that of the UK MoD."

The attorney general's office would not discuss claims about Lord Goldsmith's concerns of "government complicity" in the payments.

A spokesman said the SFO inquiry had been halted because of the "real and serious threat to national security".

"There were major legal difficulties ... given BAE's claim that the payments were made in accordance with the agreed contractual arrangements". The spokesman added: "None of this is altered by the Guardian story."

The MoD, where minister Paul Drayson runs Britain's government arms sales unit, also refused to elaborate.

"The MoD is unable to respond to the points made ... since to do so would involve disclosing confidential information about Al-Yamamah, and that would cause the damage that ending the investigation was designed to prevent," a spokesman said.

The Liberal Democrat deputy leader, Vince Cable, called for an urgent inquiry into the new disclosures last night.

"This is potentially more significant and damaging than anything previously revealed. It is unforgivable if the British government has been actively conniving in under-the-counter payments to a major figure in the Saudi government.

"There must be a full parliamentary inquiry into whether the government has deceived the public and undermined the anti-corruption legislation which it itself passed through parliament."

He added: "It increasingly looks as if the motives behind the decision to pull the SFO inquiry were less to do with UK national interests but more to do with the personal interests of one of two powerful Saudi ministers ... Tony Blair's claims that the government has been motivated by national security considerations look increasingly hollow."

Last month, Dr Cable raised the issue of BAE in the Commons and accused Prince Bandar of benefiting personally from the Al-Yamamah deal.

The new disclosures may also make BAE's attempted takeover of the US-based Armor Holdings more difficult. The deal requires approval from US regulators.

Separately, the state department has protested to the Foreign Office about the ending of the SFO inquiry, saying it undermines global efforts to stamp out corruption by exporters.

Story of a £43bn deal

1985 Al-Yamamah agreement signed by Saudi defence minister Prince Sultan and the then defence secretary Michael Heseltine. Saudis agree to buy 72 Tornado and 30 Hawk warplanes. The deal - "the dove" in Arabic - will in time be worth £43bn to BAE

1989 National Audit Office (NAO) starts inquiry into allegations that members of Saudi royal family and middlemen were secretly paid huge bribes to land Al-Yamamah contract

1992 MPs and auditor general Sir John Bourn suppress NAO report after government claims it would upset Saudis. Report never published

2001 Whistleblower alleges BAE operates "slush fund" to keep sweet the Saudi prince in charge of country's air force, but MoD covers up allegations

2004 Second whistleblower discloses to Guardian further details of slush fund. Serious Fraud Office starts investigation into alleged BAE corruption

2006 Government halts SFO inquiry; investigators were about to gain access to Swiss accounts thought to have been linked to Saudi royal family

2007 OECD, the world's anti-bribery watchdog, rebukes Blair government for terminating SFO investigation, and launches own inquiry

Original article posted here.

The Last Installment of Transnistrian Documentary

For earlier parts, please click Transnistria label below

Geography Lesson and Weapons Trade Black Hole: Transnistria

Arms Trading and Dirty Dealings: Chris Floyd

War Profits Trump the Rule of Law

I. The Wings of the Dove

Slush funds, oil sheiks, prostitutes, Swiss banks, kickbacks, blackmail, bagmen, arms deals, war plans, climbdowns, big lies and Dick Cheney - it's a scandal that has it all, corruption and cowardice at the highest levels, a festering canker at the very heart of world politics, where the War on Terror meets the slaughter in Iraq. Yet chances are you've never heard about it - even though it happened just a few days ago. The fog of war profiteering, it seems, is just as thick as the fog of war.

But here's how the deal went down. On December 14, the UK attorney general, Lord Goldsmith (Pete Goldsmith as was, before his longtime crony Tony Blair raised him to the peerage), peremptorily shut down a two-year investigation by the Serious Fraud Office (SFO) into a massive corruption case involving Britain's biggest military contractor and members of the Saudi royal family. SFO bulldogs had just forced their way into the holy of holies of the great global back room - Swiss bank accounts - when Pete pulled the plug. Continuing with the investigation, said His Lordship, "would not be in the national interest."

It certainly wasn't in the interest of BAE Systems, the British arms merchant that has become one of the top 10 US military firms as well, through its voracious acquisitions during the profitable War on Terror - including some juicy hook-ups with the Carlyle Group, the former corporate crib of George H.W. Bush and George W. Bush and still current home of the family fixer, James Baker. BAE director Phillip Carroll is also quite at home in the White House inner circle: a former chairman of Shell Oil, he was tapped by George II to be the first "Senior Adviser to the Iraqi Ministry of Oil" in those heady "Mission Accomplished" days of 2003. BAE has allegedly managed to "disappear" approximately $2 billion in shavings from one of the largest and longest-running arms deals in history - the UK-Saudi warplane program known as "al-Yamanah" (Arabic for "The Dove"). Al-Yamanah has been flying for 18 years now, with periodic augmentations, pumping almost $80 billion into BAE's coffers, with negotiations for $12 billion in additional planes now nearing completion. SFO investigators had followed the missing money from the deal into a network of Swiss bank accounts and the usual Enronian web of offshore front companies.

Nor was continuing the investigation in the interest of the Saudi royals, whose princely principals in the arms deal were embarrassed by allegations that a BAE-administered slush fund had supplied the fiercely ascetic fundamentalists with wine, women and song - not to mention lush apartments, ritzy holidays, cold hard cash, Jags, Ferraris and at least one gold-plated Rolls-Royce, as The Times reported. One scam - uncovered by the Guardian in a batch of accidentally released government documents - involved inflating the price of the warplanes by 32 percent. The rakeoff was then presumably siphoned into BAE's secret accounts, with some of it kicking back to the Saudi royals and their retainers.

The Saudis were said to be incensed by the continuing revelations spinning out of the investigation, which had begun in 2004 after the Guardian first got wind of the alleged slush fund. Last month, with talks on the new $12 billion extension in the final stages, the Saudis lowered the boom, threatening to ashcan al-Yamanah and buy their warplanes from - gasp! - the French instead. For a week or two, the Blair government played chicken with the Saudis, hoping the threat was just a hardball bluff for better terms (or maybe bigger slush).

Then came a curious intervention. Last month, Dick Cheney traveled to Riyadh for talks with Saudi King Abdullah. There he beseeched the king to step in and help pull America's fat out of the wildfire of Iraq by using Saudi influence on Iraq's volatile Sunni minority, the Scotland Sunday Herald reported. It's also thought that Cheney asked the Saudis to stump up more cash to replace some of the billions of dollars in missing "reconstruction money" that White House cronies and local operators have somehow "misplaced" into their own pockets during the war.

It is widely believed in top UK political circles that among the many considerations the Saudis asked for in return for the possibility of helping out in Iraq was the application of White House pressure on Tony Blair to quash the BAE investigation. The king apparently put this more in the form of a demand than a request: senior sources in the Blair government told the Observer that the Saudis threatened to stop sharing its extensive intelligence on terrorism and kick all British intelligence and military personnel out of the kingdom if Blair didn't kill the probe.

But if Cheney and Abdullah did do a strongarm number on Blair, they probably didn't have to break a sweat to convince him. In this case, Blair no doubt could echo the words of Macbeth when he saw the ghostly dagger drawing him on to dirty deeds: "Thou marshall'st me the way that I was going." For certainly, Blair had no desire to see the fraud probe of BAE progress any further. He has been one of the arms peddler's biggest cheerleaders - and most assiduous shills - throughout his long term in office. For example, in January 2002, as India and Pakistan teetered on the edge of a nuclear exchange over Kashmir, Blair made a lightning trip to both countries to preach peace - and to hawk a $1.4 billion deal for BAE jet fighters with India. This move, of course, only made the already outgunned Pakistanis even more likely to use their nukes to stave off any attack. It seems not even the greatest threat of nuclear war that the world had ever seen was enough to stop Blair from throwing gasoline on the fire in the service of BAE's bottom line.

Yet although the Saudis certainly weren't pleased with the investigation and wanted it to go away, as the SFO moved forward it became increasingly clear that BAE itself had more to fear from the probe than did the gilded guardians of Mecca. In 2002, the UK adopted a set of stringent anti-bribery laws that criminalized the use of old-fashioned baksheesh to grease a deal with foreign powers. As the Guardian reported, the SFO were pursuing three key questions: Were members of the Saudi royal family getting secret UK payoffs? Were the financial transactions crimes under UK law? And had BAE lied to government agencies in its claims to have reformed its past practices and dispensed with the "confidential Saudi agents" who served as bagmen for the bribes?

They believed the answers were waiting in Berne, Switzerland, in a box of files being kept for them by the Swiss federal prosecutor's office, the Guardian reported. This box "was the hottest potato of all. The Swiss dossier contained print-outs of BAE's recent offshore banking transactions with key Saudi middlemen. The normally highly-secret bank records had recently been secured by the authorities at the British investigators' request."

But just before they were to fly down to claim the Swiss bank trove, Goldsmith ordered the SFO to stop the probe and turn over all their existing files for his examination. After two days of poring through the material (or perhaps not poring through it), Goldsmith suddenly announced that, upon consultation with the cabinet and the prime minister, he was quashing the entire investigation in the name of "the UK's security and foreign policy interests."

Legal experts told UK papers they could find no precedent for such a move. Oddly enough, Her Majesty's Attorney General - a certain Lord Goldsmith - had been of a similar mind just 10 days before, when, in response to a ferocious PR campaign against the SFO probe launched by BAE's friends among the great and good, he declared that he had "no intention of interfering with the investigation," as the Guardian reports. What a difference 10 days, Dick Cheney and Saudi blackmail makes!

Not to mention Blair's desire to peddle even more BAE weaponry on yet another "peace mission" - this time to the Middle East, where he conducted a frantic and utterly fruitless "whirlwind tour" in mid-month. But before jetting off to seek ever-elusive "breakthroughs" on Iraq and Israel-Palestine, Blair wanted the SFO imbroglio wrapped up, so he could proffer BAE planes to the United Arab Emirates without all that folderol about bribes hanging over the company, the Times reported.

In delivering his ruling on BAE, Goldsmith acted with the same bold flip-floppery he had displayed in the run-up to the invasion of Iraq. Then too, there was a small gap of time in which a momentous reversal was made, between his first, detailed private advice to Blair that there were at least six different ways in which the invasion could be considered a war crime and his last-minute, hastily-sketched public declaration that, by gum, he thought the war just might be legal after all. Despite a few minor quibbles on various tactics in the never-ending Terror War - Goldsmith has on occasion voiced a few mild objections to the American concentration camp on Guantanamo Bay - the good Lord has proven himself a worthy counterpart to his comrade across the sea, US Attorney General Alberto Gonzales, in exalting the principles of political expediency and war profiteering above the rule of law.

II. Tony in Wonderland

There is yet another parallel between the fraud probe kibosh and the Iraq warmongering: the official reasons given for the action have been constantly changing. Indeed, in the days following Goldsmith's hugger-mugger announcement - carefully timed to coincide with the release of the final report on Princess Diana's death, which the government knew would consume every ounce of media oxygen that day - Blair and his high ministers of state peddled a dizzying and often contradictory array of justifications for stifling the investigation.

There was the initial "security and foreign policy interests" offered by Goldsmith to Parliament and initially echoed by Blair. The UK-Saudi relationship "is vitally important for our country, in terms of counterterrorism, in terms of the broader Middle East, in terms of helping in respect of Israel-Palestine, and that strategic interest comes first," Blair said after the ruling, as AP reported.

However, that explanation didn't play very well, for it seemed to confirm the reports that Britain had indeed been blackmailed and bullied by Saudi Arabia into dropping the probe. The underlying implications of Blair's stance were riddled with glaring contradictions: Saudi Arabia is our strong, trusted friend and ally who, er, uh, has threatened to fan the flames of regional conflict and expose us to a much greater risk of terrorist attack if we don't disregard our own laws.

Somehow, the sight of a British Prime Minister declaring "if we don't do what they say, they'll hurt us" did not convey the degree of wisdom and reassurance the government sought to project about the decision. As AP noted, some of those most upset by the ruling came from Blair's own increasingly-fractious Labour Party - which hit another new low in the polls this week, dropping further behind the resurgent Tories. "We appear to be giving businessmen carte blanche to do business with Saudi Arabia, which may involve illegal payments or illegal inducements," said Eric Illsley, a Labour member of Parliament's Foreign Affairs Select Committee. "We have been leaned on very heavily by the Saudis."

And so this argument was largely supplanted by the economic considerations that BAE's supporters had been trumpeting in the press in the weeks before Goldsmith's ruling. If the Saudis had slaughtered "The Dove" deal because of the SFO probe, Britons were told, it would have cost the nation 100,000 jobs. This figure, first floated by BAE's media and parliamentary front men last month, soon became the standard number touted by government backers after the Goldsmith ruling. The fact that it was flatly contradicted by a University of York study which showed that a cancellation of the impending al-Yamanah extension would have eliminated just 5,000 jobs cut no ice with the panicky spin doctors. (To be sure, even the lesser job loss would have been a heavy blow to the workers involved; but at that smaller level, it was a blow that could have easily been cushioned by government compensation and genuine efforts at retraining or re-employment elsewhere: the kind of action that Blair's government has often promised yet seldom delivered to the many industries that have gone belly-up - and overseas - during his tenure.)

The new line also flatly contradicted Goldsmith's original declaration to Parliament, in which he insisted that economic considerations had "played no part" in his decision. When the rank hypocrisy of this was pointed out, Blair and Goldsmith both came up with a new reason: the case wasn't strong enough to go forward, there was not enough evidence of wrongdoing. Aside from the fact that Goldsmith himself had prevented the SFO from examining the most relevant evidence in the entire case - BAE's own secret bank records - this stance was, again, at odds with his position just days earlier, when he'd declared he would not intervene in the investigation. That declaration had come after he had gone over the case and the evidence for it in a meeting with SFO director Robert Wardle.

SFO officials strongly disputed Blair and Goldsmith's claim that the case was weak. And in any case, the whole point of the probe was not to guarantee a prosecution but to establish the truth. While the Blair government's disinterest in establishing the truth as opposed to pushing a political line is well-established (see the Downing Street Memos), they are vitally interested in information. So much so that they apparently bugged the SFO offices during the probe, the Independent reported. "I was told by detectives that the probe was being bugged. They had reached this conclusion because highly confidential information on the inquiry had been reaching outside parties," a senior figure involved in the investigation told the paper. SFO investigators believe the probe was actually quashed because the Blair spies had learned how very substantial it was, not because the evidence was lacking.

In the end, after the "weak-case" justification turned out to be a weak case itself, Blair and the gang reverted back to a variation of the "security" line: the noble struggle to free the peoples of the Middle East from the clutches of armed Islamic extremism superseded all other considerations. Despite the ever-soaring rhetoric, however, Blair failed to make clear exactly how providing $80 billion worth of advanced arms to perhaps the most repressive Islamic extremist state on earth can be said to advance the cause of freedom and tolerance in the Middle East.

Lord knows - and lords know - that unseemly accommodations sometimes have to be made in this world, especially in geopolitics. A wink here, a little baksheesh there between unsavoury characters are often better than, say, launching a war of aggression and murdering more than half a million innocent people to achieve your political and commercial ends. But in the BAE case, as in so much else in politics, it is the hypocrisy that rankles most. Western governments obviously believe they must give guns and bribes to extremist tyrants in order to obtain the oil that keeps their own nations in such disproportionate clover - but they lack the guts to say so in plain language, dressing up this ugly business with meaningless trumpery about freedom, peace and security.

Are they trying to mask their own cynicism - or protect the tender sensibilities of their electorates, who might prefer sugared lies to acknowledgements of the dirty deals that undergird their way of life?

Chris Floyd is an American journalist. His weekly political column, "Global Eye," ran in the Moscow Times from 1996 to 2006. His work has appeared in print and online in venues all over the world, including The Nation, Counterpunch, Columbia Journalism Review, the Christian Science Monitor, Il Manifesto, the Bergen Record and many others. His story on Pentagon plans to foment terrorism won a Project Censored award in 2003. He is the author of Empire Burlesque: High Crimes and Low Comedy in the Bush Imperium, and is co-founder and editor of the "Empire Burlesque" political blog.

Original article posted here.