The British, however, remained confident of securing at least a part of the potential order. Margaret Thatcher raised this export prospect when she made her first visit to Saudi Arabia in 1981. Subsequent reports by the defence sales department of the Ministry of Defence increased her expectations that an order for Hawk trainers would be given to British Aerospace. Michael Heseltine as Defence Secretary made a visit to Riyadh and came back full of optimism. By chance he reflected this in a conversation he had in my house in 1983 with a well-connected Saudi businessman, Wafic Saïd. Both of them were my guests at a dinner I gave in honour of former President Nixon. On discovering that Wafic Saïd had Saudi Arabian interests, Heseltine talked about his recent meeting with Prince Sultan and his confidence that a big Hawk order would be coming Britain’s way. ‘Nothing has been agreed’ said Wafic Saïd. ‘I wouldn’t count on anything yet.’ ‘Who are you?’ asked Heseltine sharply. ‘What do you know about it?’2
Some weeks later Wafic Saïd was approached by James Blyth, the head of defence sales at MoD. Saïd had no business connection with British Aerospace and was not an arms dealer. But he was known to be a close confidant of and business adviser to Prince Sultan and his family. For that reason James Blyth asked Saïd if he could find out what was happening to the Saudi aircraft order. Wafic Saïd, who was married to an English wife and was staunchly pro-British, immediately agreed to help. He raised the subject in Washington a few days later with his close friend Prince Bandar bin Sultan, the Saudi Ambassador to the United States.
After checking back with his father, Prince Bandar passed on bad news to Wafic Saïd, ‘I am afraid our British friends have lost the contract’, he reported. ‘My father has signed a letter of intent with the French.’3
When James Blyth was given this information he was astounded, but his checks proved it to be correct. Dassault had indeed received from Prince Sultan a letter appointing them the suppliers of Mirage aircraft to the RSAF.
The news shook both British Aerospace and the British government at the highest levels. Margaret Thatcher wanted to know why the MoD’s optimism had been so misplaced and what, if anything, could be done to win the contract back. She was advised that the only source of inside information available to the British government that had proved to be reliable was Wafic Saïd. So she asked to see him.
Wafic Saïd met the Prime Minister at No. 10 and was deeply impressed. He recalled:
‘She was extremely well briefed and absolutely furious. She ran through the history of how Britain alone had been willing to provide the RSAF with Lightnings back in 1959. She said ‘We trained their pilots. We taught them English. We built a close relationship with them. I will not accept that we should be kicked out by the French! This contract is vital to our aerospace industry! We must fight back.’4
The only advice Wafic Saïd felt able to offer was that she should have a face- to-face meeting with Prince Bandar as soon as possible. Margaret Thatcher immediately agreed to this.
Wafic Saïd gave her this good advice not just because Prince Bandar was the defence minister’s son, but because he too was staunchly pro-British in his personal and aviation loyalties. He had trained as a pilot at Cranwell, retaining close friendships from his days as a Flight Lieutenant in an RAF Lightning squadron. Despite having been given the politically incorrect nickname of ‘Woggie’ by his fellow pilots, Bandar enjoyed their camaraderie, their humour and their English way of life. He was knowledgeable about British politics and had become a great admirer of Margaret Thatcher in the aftermath of her Falklands victory.
It took no time for this admiration to become mutual. At their first meeting Prince Bandar was immediately recognised as ‘one of us’. Handsome in his looks, military in his bearing, expert in his briefing and talented in his geopolitical flair for deal making, he became an immediate and enthusiastic collaborator with the Prime Minister in her drive to win back the huge aircraft order for the RSAF from the French. To an outsider this looked like mission impossible as Dassault already had Prince Sultan’s letter of intent in their pocket. But Bandar was one of the few insiders who understood the tension that was growing between the King and his younger brother on defence issues. So Bandar advised Margaret Thatcher that with the right strategy she had a chance of persuading the King to reverse Saudi Arabia’s plan to purchase Dassault’s Mirage aircraft for the RSAF.
King Fahd was unhappy at the way his predecessor King Khaled had delegated all defence decision-making to Prince Sultan. Not only did the new king wish to reassert his monarchical authority, he also had doubts about the reliability of France as an ally.
At the prompting of Prince Bandar, Margaret Thatcher converted King Fahd to the idea that she would be rock solid as a loyal ally to Saudi Arabia. Throughout 1984 and early 1985 she sent the king a series of personal handwritten letters and secret messages. Some of them were on intelligence matters such as reports about the trouble-making intentions of the Shia leaders of Iran. Others were notes about her talks with President Reagan, Deng Xiaoping and other world leaders. King Fahd was flattered. He passed several oral messages to and from the Prime Minister using Prince Bandar as an intermediary. ‘It is better for these communications to go outside the system’, Bandar told Margaret Thatcher.5
THE DENIS BACK CHANNEL
In the age of recorded telephone calls and civil service procedures there is no normal method for Britain’s head of government to communicate privately with a foreign head of state outside the system. But Margaret Thatcher liked listening to unofficial voices reaching out to her in unorthodox ways. She understood the Saudi royal family’s love of conspiratorial secrecy. So she created a uniquely secure back channel designed to beat the system. It was called Denis.
The battle to win the Al Yamamah deal was nurtured, facilitated and watered by the invisible hand of Denis Thatcher. He became a pivotal player for four reasons. His wife wanted him to do it. His business acumen enabled him to understand the magnitude of the opportunity and its complexities. His patriotism caused him to love the idea of beating the French or, as he called it, ‘stuffing the Frogs’.6 He built a crucial rapport with the key executive at British Aerospace, Dick Evans, a rugby-playing kindred spirit who acted as the link man to Bandar.
Dick Evans recalled:
I had completely open access to No. 10 through Denis who was bloody marvellous. I would ring him up, usually to say that I had a message from Bandar and could I come round? In those days there was a back entrance and I’d meet Denis there. He’d take me up the staff stairs to his flat, usually about six in the evening, and I’d wait having a drink with him until the Prime Minister came up from her study. Then I’d give her Bandar’s message and often take one back.7
These messages were partly about the positioning of the British bid for what became the Al Yamamah contract, but more about what King Fahd was thinking and how the Prime Minister might consider replying to him in her back-channel communications. There were also at least six unrecorded private meetings between Prince Bandar and the Prime Minister in the crucial 1984–1985 period. One of them was in Saltzburg in August 1985 when she broke her holiday in Switzerland to meet him.
Margaret Thatcher, well guided by Bandar, played the king brilliantly. She recognised that the battle for Al Yamamah was not really about aircraft capabilities or prices. It was a much more personal and strategic fight to convince the Saudi monarch that Prime Minister Margaret Thatcher of Britain would be a more reliable long-term ally than President François Mitterand of France.
At the time when these deliberations were taking place, Prince Bandar was becoming closer to his uncle, King Fahd, than he was to his father, Prince Sultan. No Western observer can ever comprehend such shifts within the House of Saud which are emotional as well as political. But on the political front, Prince Bandar as the Saudi Ambassador to Washington was also handling another dimension of the Kingdom’s aircraft buying strategy.
The Saudis’ highest priority was to equip the RSAF with American F15E fighter jets. Am
bassador Bandar not only reported that Congress would never allow the sale of F15E because of pressure from the Israeli lobby; he also orally conveyed a personal message to the king from President Reagan which in effect said, ‘Sorry about the Congress: if I were you I would buy the British Tornados.’8
Although the deal was now moving Britain’s way, inside the rival camps of companies, agents, promoters, fixers and commission takers in Saudi Arabia there was a fierce dogfight about the merits of Tornados versus Mirages. With more than a little help from the Bandar–Evans–Denis back channel the British Prime Minister gave the strongest of assurances about the continuity of Tornado spares, ammunition supplies and pilot training.
King Fahd was almost convinced to buy British but at a key moment in the debate he asked his now favourite nephew, Bandar, for his expert assessment of the two aircraft from the point of view of a former pilot. ‘Each aircraft has its pros and cons,’ said Prince Bandar, ‘but this is a strategic issue. The key question is: in times of difficulty who will stand behind Saudi Arabia, Thatcher or Mitterand?’9
At the moment when King Fahd was squaring up to this decision he was told that the following day Margaret Thatcher’s aircraft would be refuelling in Bahrain on its way back from a visit to Malaysia and India. The king suggested that the British Prime Minister should make her stopover in Riyadh, telling Bandar that he might be willing to agree the aircraft deal with her. Seizing the moment Bandar called Dick Evans who in turn called Michael Heseltine, Denis Thatcher and anyone else he could reach to achieve the miraculous feat of changing the flight plan for the Prime Minister’s homeward journey from India. The miracle was accomplished.
Margaret Thatcher, still riding high internationally on the crest of the wave created by her Falklands victory, won King Fahd’s political heart over dinner in Riyadh by the forthrightness and power of her personality. He was impressed by her mastery of the regional issues of Iran and Iraq. It also helped that he thought her a beautiful and charming woman. Around midnight the king quietly said the momentous words, ‘Prime Minister the deal is yours’.10
DIFFICULT HURDLES TO OVERCOME
In Saudi Arabia a deal with the Government is not done until it is formally and publicly announced. So for the next six months there were intense negotiations to solve four major problems. They were: how to deliver what the Saudis wanted on an impossibly tight schedule; how the contract should be paid for; how to solve what was known as the Tornado nuclear issue; and how to handle Mark Thatcher.
It was the last problem which worried Denis and motivated his continuing involvement as an invaluable channel of communication on the project. As a father he knew better than anyone else that ‘the boy Mark’ as he called his son was a loose cannon.
Self promoting his skills as a wheeler-dealer of influence in the Arab world, Mark had caused earlier embarrassment to his mother by inserting himself as a consultant in a construction contract in Oman won by the British company Cementation Ltd. Critical newspaper coverage resulted making unfounded suggestions of impropriety. The reporting may have been unfair but the last thing the Al Yamamah deal needed was similar bad headlines. Yet there was a real danger of this because Mark Thatcher the entrepreneur, having got wind of the magnitude of the contract under negotiation, was offering his services to some of the key players. What could he provide? Access and influence in theory, but in practice this was unnecessary as the Prime Minister was already totally committed to Al Yamamah for national interest reasons. For the same reasons Denis was already providing ample access for Dick Evans of British Aerospace and facilitating Prince Bandar’s backchannel messages. As Dick Evans put it, ‘Mark was a complete distraction. He brought nothing that could be helpful or useful. He simply wasn’t needed. But his efforts to be involved really worried Denis who was fiercely protective of Margaret.’11
Denis needed an ally in his strategy to keep Mark away from making commission deals with British companies in Al Yamamah. Dick Evans became that ally.
It was hard work. Denis was exceedingly bloody angry that Mark was trying to become involved. He kept asking me to keep him out. I said at one stage, ‘If you his father and the Prime Minister his mother can’t contain him what can I do?’ But between us we did. I remember one moment of madness in the flat at No. 10. I was there with Denis when Mark rang me up and said he was in a hotel in Europe standing on the balcony and that he would jump off it if he wasn’t allowed in the deal. Denis just said, ‘Tell him to jump!’ It was the idiot son at his worst.12
Suicide jumps aside, such episodes of Thatcher family dysfunctionality had long been a problem. Denis solved it this time around by making sure his own son was not engaged by British Aerospace and its subcontractors. If there were any issues the Prime Minister needed to know about, fast-track access to No. 10 was provided not by her commercially ambitious and highly visible son but by her invisible and loyal husband. This protective mechanism succeeded. Contrary to some press rumours, Mark Thatcher never came close to compromising his mother’s integrity. British Aerospace and is subcontractors did not make any commission or fee paying deals with him.
Away from the distractions of Mark, there were important strategic issues which needed the hands-on attention of the Prime Minister during the Al Yamamah negotiations. After the Saudi Defence Minister swung behind the king on the decision to buy British, the size of the deal increased dramatically. Prince Sultan now wanted to order seventy-two Tornado aircraft and thirty Hawks, insisting that half of them should be in service with the RSAF within a year. This could only be achieved by taking a number of Tornados out of the line of operational service with the RAF. The Chief of the Air Staff was summoned to No. 10 to be given this order. After he had reluctantly agreed, Air Chief Marshal Sir Keith Williamson complacently observed to the Prime Minister that the Tornado was ‘such a good aircraft that it sells itself’. She was having none of it. ‘I can tell you from experience, Air Chief Marshal, that nothing ever sells itself – do you hear me?’13
The Tornados that were taken out of the RAF’s line could have presented a major obstacle to the deal. For these Interdiction Strike (IDS) version of the aircraft were designated to be the bombers that would be used to drop Britain’s nuclear deterrent on Moscow in the event of all-out war with the Soviet Union. In preparation for this Armageddon scenario, eighteen of the RAF’s Tornados had already been ‘nuclear wired’ meaning that they were installed with a top-secret integrated computer system for the carriage and release of nuclear bombs. It was these same Tornados which, on the orders of the Prime Minister, were about to be temporarily transferred from the RAF for purchase by Saudi Arabia.
If the Israelis or indeed the British Foreign Office had ever discovered that the UK government was selling nuclear-capable aircraft to an Arab air force in the Middle East, all diplomatic hell would have broken loose. But Margaret Thatcher was playing her Al Yamamah cards extremely close to her 10 Downing Street chest. She showed none of them to her Foreign Secretary. Instead she used the ubiquitous Prince Bandar to explain the problem to King Fahd. He gave a categorical assurance that the nuclear-wired Tornados bought by Saudi Arabia would never be used to carry nuclear bombs. This was an entirely credible promise since Saudi Arabia had no nuclear bombs. But only a trustworthy king could have given the required assurance, only a trusting Prime Minister could have accepted it and only the two of them could have kept it secret.
Once the nuclear issue had been taken care of, the most pressing issue was working out how the Al Yamamah deal could be paid for. This was another huge problem. Although Saudi Arabia was an oil-rich country, its civil infrastructure modernisation programme had resulted in a substantial budget deficit. So the bills for Al Yamamah had to be met out of a separate off-budget account financed by a unique oil for aircraft agreement. This needed the approval of the king and prime minister.
The agreement details were fiendishly complicated since Britain could not be at risk from exchange-rate or oil-rich fluctuations. Yet all the d
ifficulties were overcome. Margaret Thatcher had to cajole a consortium of oil majors – Shell, BP and Texaco – to accept liftings from the Aramco terminals in Saudi Arabia’s Eastern Province of between 200,000 and 600,000 barrels of oil per day. She also had to bang heads together at the Bank of England, the Treasury and the Ministry of Defence to set up the government to government account arrangements. It was difficult but with the Prime Minister in charge it got done.
The prices of the aircraft sold in the first tranche of Al Yamamah have never previously been published. They were £25.2 million for each of the seventy-two Tornados, £5.3 million for each of the thirty Hawks and £2.8 million for 30 PC9 Trainers which were added to the deal the night before the announcement. In addition to these hardware costs of just over £2 billion there were £3.2 billion worth of spares, training facilities and construction costs for new air bases.14 Nothing like it in the history of British export deals had ever been seen before.
Astonishingly, this was only just the beginning. The Saudis made maximum use of their new off-budget finance arrangements using oil liftings. So Al Yamamah was renewed again and again and again. It became much more broadly based than an aircraft contract extending to naval ships and anti-terrorist facilities. Even so, only about 20 per cent of Al Yamamah covered military hardware. The other 80 per cent of the approximately £90 billion spent on the programme to date has gone on the construction of roads, schools, training institutes, housing, general services and infrastructure.
THE MOTIVATION OF THE PRIME MINISTER
Even Margaret Thatcher can never have foreseen, when she was politically wooing and winning King Fahd, the magnitude of what she was going to accomplish for Britain’s balance of payments and exports. But in her usual clear-headed way she saw the priorities for a prime minister. They were helping British companies to win business in new overseas markets, boosting Britain’s fragile aerospace industry and creating jobs in the manufacturing sector. There was also the vital interest of increasing British influence in the Middle East. She talked frankly to Dick Evans about these objectives during the saga of the Al Yamamah negotiations, adding one unexpected political priority – the winning of marginal seats in general elections.
Margaret Thatcher: Power and Personality Page 55
