August 11, 2008 3:00 am

Saudis in talks for 72 Typhoons

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Saudi Arabia has begun discussions to buy a second batch of Eurofighter Ty-phoons in what could lead to another multi-billion pound order for BAE Systems.

The Saudi Royal Air Force already has 72 Typhoons on order from the UK government under an agreement signed last September and which are being built by BAE, Britain's largest arms contractor. The Gulf kingdom could buy as many as 72 more of the multi-role aircraft, an adviser to the Saudi government confirmed last night.

Talks on the new deal have been under way for several months, but defence industry sources said they had been accelerated in the wake of a decision by the House of Lords last month on alleged bribery involving an earlier arms deal with Saudi Arabia.

The Lords ruled the Serious Fraud Office had been right to drop its investigation into alleged bribery involving the £43bn ($82.5bn) Al-Yamamah arms deal signed between Britain and Saudi Arabia in 1985. Under the deal BAE, as the main contractor, provided Tornado aircraft and valuable support and maintenance.

The deal has been dogged by controversy, although BAE has always denied any wrongdoing.

A second Eurofighter deal could ease the budget crisis that has engulfed the UK's Ministry of Defence as it seeks to divert some of this third tranche of aircraft. The department is committed to taking delivery of another 88 aircraft from the third production run under the contract with the four-nation consortium that makes them.

The nations - Britain, Germany, Italy and Spain - have been locked in talks for months over this third tranche.

The initial 72 aircraft order, known as Project Salam, was worth £4.3bn, with the contract value likely to grow to £20bn once support and maintenance are included.

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