U.S., Saudi Arabia Sign $29.4 Billion F-15 Fighter Deal Backed by Congress

The Obama administration has signed an agreement with Saudi Arabia that Congress approved in 2010 to sell Boeing Co. F-15 fighters to the Gulf ally.

“Valued at $29.4 billion, this agreement includes production of 84 new aircraft and the modernization of 70 existing aircraft as well as munitions, spare parts, training, maintenance and logistics,” the White House’s principal deputy press secretary, Josh Earnest, said in an e-mailed statement. The jets “are among the most sophisticated and capable aircraft in the world,” he said.

The sale, signed on Christmas Eve in Riyadh, “will send a strong message to countries in the region that the United States is committed to security in the Gulf,” said Andrew Shapiro, assistant secretary of state for political-military affairs, at a State Department briefing announcing the deal’s completion.

The announcement came after Iran threatened to block the Strait of Hormuz, a major shipping channel for Persian Gulf oil, if economic sanctions are increased. The sanctions are aimed at stopping the Islamic Republic from acquiring a nuclear bomb.

Shapiro cited Iran as a threat to the Gulf region, though he denied any link between the announcement’s timing and Iran’s recent threats.

“We did not gin up a package in response to current events in the region,” he said.

Israel Keeps ‘Edge’

He also said the deal “will not have an impact on Israel’s qualitative military edge” in the Middle East.

The first of the new warplanes will be delivered to Saudi Arabia in early 2015. Upgrades to existing planes will begin in mid-to-late 2014, according to James Miller, principal deputy undersecretary of defense for policy.

About 5,500 Saudi personnel will get training with U.S. forces through 2019, said Miller, who joined Shapiro at the State Department briefing.

The planes are equipped with advanced radars, missiles and infrared sensors, Miller said. A common communications system will allow U.S. and Saudi pilots to operate in the same airspace, he said.

Building the Boeing (BA) planes will support 50,000 U.S. jobs for at least a decade and aid 600 suppliers in 44 states, Shapiro said. The annual economic impact to the U.S. will be $3.5 billion, he said.

“Boeing views Saudi Arabia as a market with great potential and has made it a priority to invest in Saudi Arabia’s aviation industry,” said Boeing Chairman Jim McNerney, in a written statement.

Last Sale in 1992

Saudi Arabia’s last significant U.S. weapons purchase was for 72 F-15s in 1992, a transaction valued at as much as $9 billion. The final installment of those planes was delivered in November 1999.

Saudi Arabia, the world’s biggest oil supplier, used F-15s and Apache helicopters in late 2009 to fight Muslim Shiite rebels who crossed the border from Yemen and seized territory inside the kingdom.

“This agreement reinforces the strong and enduring relationship between the United States and Saudi Arabia, and demonstrates the U.S. commitment to a strong Saudi defense capability as a key component to regional security,” Earnest said.

Separately, the administration also is increasing arms sales to another Gulf ally, the United Arab Emirates. The U.S. this week reached an agreement with the Emirates to sell them Lockheed Martin Corp. (LMT)’s Thaad missile interceptors for an initial contract of $1.96 billion in a deal potentially valued at $3.49 billion.

Congress this month also approved a $304 million sale to the Emirates of 4,900 guided-bomb kits, including 600 for bunker-buster munitions.

To contact the reporter on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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