Saudi Arabia To Buy US Combat Ships For $11B In Advance Of Iran Sanction Relief Despite Massive Budget Deficit

The U.S. State Department has reportedly agreed to the sale of up to four littoral combat ships for some $11.25 billion, government officials said, according to Bloomberg News. The deal comes as Saudi Arabia’s navy has sought to modernize its military defenses as it prepares for a lifting of international sanctions on Iran, its long-time regional competitor.

Approval of the deal by the State Department allows Saudi officials to negotiate contracts for the ships, unless Congress decides to block the deal. The ships are being sold under the Foreign Military Sales program, according to an unidentified official, Bloomberg reported.

Two versions of the combat ships meant to operate in shallow waters were designed by Lockheed Martin Cop. and Austal Ltd., and Saudis have reportedly expressed interest in the Lockheed ship, various reports indicated. It would mark the first major sale of U.S.-built surface naval vessels in years, a U.S. official said, as U.S. sales to Arab states are limited by legislation that requires the U.S. to maintain Israel’s military superiority in the Middle East. The sale also includes possible purchases of engineering, logistical and training support for the Saudi navy, as well as radar systems and munitions and fire-control systems. The version of the ship offered to Saudi Arabia has been customized to match Saudi requirements.

Saudi Arabia has been building up its military defenses in advance of sanction relief on Iran. The crippling sanctions were expected to be lifted in the coming months as part of a deal reached in July between the U.S., Iran and five other world powers, requiring a commitment from Iran to stem its nuclear program. Saudi Arabia paid roughly $6 billion to U.S. defense companies in the lead-up to the historic Iran nuclear deal.

News of the sale comes as Saudi Arabia has also experienced a major budget deficit, largely due to a slump in oil prices. The International Monetary Fund has estimated that Saudi Arabia’s budget deficit would exceed $107 billion this year. The financial shortfall has reportedly caused divisions within the Saudi kingdom, as some in the royal family have quietly blamed the kingdom's new leadership with political and economic failure.

Congress has 30 days to disapprove of the combat ship sale. Even if it passes, it could take years before a contract is signed.