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November 19, 2006
Saudis Play Hardball With Blair

Tony Blair has been warned by the Saudis to force British investigators to drop a probe into a multimillion-pound slush fund or face the loss of diplomatic relations. The Saudi royal family has also threatened to stop all interagency intelligence cooperation on al-Qaeda and other counterterrorism efforts (via King Banaian):

SAUDI ARABIA is threatening to suspend diplomatic ties with Britain unless Downing Street intervenes to block an investigation into a £60m “slush fund” allegedly set up for some members of its royal family.

A senior Saudi diplomat in London has delivered an ultimatum to Tony Blair that unless the inquiry into an allegedly corrupt defence deal is dropped, diplomatic links between Britain and Saudi Arabia will be severed, a defence source has disclosed.

The Saudis, key allies in the Middle East, have also threatened to cut intelligence co-operation with Britain over Al-Qaeda.

The contretemps started over a corruption probe at British defense contractor BAE. The executivs set up a slush fund totalling 60 million pounds, or roughly $100 million, in order to help the royals maintain their lavish lifetyle. They wined and dined the Sauds in style, providing luxury items like a gold Rolls Royce and expensive holiday trips. In exchange, the Saudis kept their business with the British.

However, the British authorities discovered the corrupt connections and indicted several BAE executives. More pointedly, they convinced Swiss banking officials to open the accounts through which the fund operated and discovered the scope of the fraud and kickback scheme. The funds came from inflated payments to other units, which then kicked the monies back through Switzerland so that BAE could pimp for the Sauds.

The Sauds hit the roof when their Swiss bankers told them of the investigation, according to the Times of London source. They sent an emissary to 10 Downing Street, making it clear that the entire British-Saudi relationship hinged on getting their gold Rolls Royces supplied by British contractors, and that the entire war on terror depended on whether royals could still sun themselves on exclusive beaches.

This should be a warning to the West as to the fragility of Saudi support on the efforts to stop radical Islamism ... such as it is. They appear to only support the war as long as their endless supply of luxury items, supplied by fraud and corruption, continues without interruption. Counting on their efforts in the long run is a bad strategy. We need to do what we can to avoid antagonizing them, but we had better start working on alternate strategies to work around their petulant obstructionism.

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Posted by Ed Morrissey at November 19, 2006 9:52 AM

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