US-Saudi Arms 'Megadeal' Collapses Over Russia, China Links

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by Tyler Durden
Friday, Sep 15, 2023 - 11:40 PM

Via The Cradle, 

US weapons maker RTX, formerly known as Raytheon Technologies, scrubbed a multibillion deal with Saudi firm Scopa Defense earlier this year over "concerns" that the latter was pursuing business with sanctioned Russian and Chinese companies, according to people familiar with the deal that spoke with the Wall Street Journal (WSJ).

In 2022, RTX and Scopa signed a memorandum of understanding to build a factory in the kingdom for air defense systems to protect Riyadh from airstrikes. The plan reportedly called for installing radars and multiple air defense systems with an investment of $25 billion in the kingdom and $17 worth of sales.

Image source: Breaking Defense

The owner of Scopa, Mohamed Alajlan, told the WSJ that his company has no deals with sanctioned Russian companies and that any deals with Chinese firms “are limited to securing raw materials such as copper or rubber for use in producing ammunition and armored vehicles.”

“We don’t work with any companies that have international sanctions,” Alajlan told the WSJ, adding that the decision by RTX to scrub the deal was “rushed, illogical, and even irrational.”

Alajlan, who also chairs the Saudi-Chinese Business Council, is the heir of a prominent Saudi family that for decades has imported Chinese textiles to the kingdom.

According to the WSJ, the “unease” over Scopa's alleged ties to sanctioned Russian and Chinese companies “was a deciding factor for an advisory board of retired US military officers to resign from the Saudi company.” Furthermore, the daily claims Scopa fired its chief executive “who had raised the sanctions concerns with his company’s owner and US officials.”

Alajlan is also accused of hiring an executive from a Russian company sanctioned by the US to run a separate firm he had set up, known as Sepha. Moreover, he reportedly hired a Chinese executive to run yet another firm, Tal, “which had engaged in talks regarding deals with Chinese firms that are also sanctioned by Washington.” Tal and Sepha shared computer servers with employees at Scopa, which was allegedly a major concern for RTX.

A document reviewed by the WSJ showed that Sepha had looked at “marketing Russian ammunition, body armor and surveillance equipment in Saudi Arabia, assembling Russian attack helicopters there, and manufacturing armored vehicles with Russia’s Military Industrial Co.”

The US embassy in Riyadh knew about the talks Tal and Sepha were having with Chinese and Russian companies as early as August 2022, according to the WSJ. US officials told Scopa that this “could seriously hinder the ability of Scopa to enter into contractual agreements with US defense firms.”

The details of the failed “megadeal” come as Washington is looking to rekindle ties with its longtime Arab partner after more than a year of simmering tensions that pushed Riyadh closer to Russia and China.

RTX, one of the largest weapons firms in the US, is currently being sued alongside Lockheed Martin and General Dynamics for "aiding and abetting war crimes and extrajudicial killings" by selling weapons to the Saudi-led coalition waging war in Yemen. The lawsuit was filed on behalf of the victims of two coalition bombings in Yemen -- one for a wedding in 2015 and another for a funeral in 2016.

According to Human Rights Watch (HRW), in October 2015, the Al-Sanabani family was readying to celebrate a relative's wedding when a coalition jet bombed the area, killing 43 Yemenis, including 13 women and 16 children. A year later, coalition jets dropped a US-manufactured GBU-12 Paveway II laser-guided bomb on a crowded funeral, killing over 100.

The lawsuit alleges that western-manufactured bombs have killed over 25,000 civilians since the beginning of the NATO-backed war nearly eight years ago.