Raytheon Expects Biden to Block $500M Bomb Sale to Saudi Arabia

Raytheon Technologies executives told investors Tuesday that it expects the Biden administration to block at least one arms deal to a Middle Eastern ally as the U.S. shifts its weapons export policy.

Raytheon CEO Greg Hayes, speaking on the company’s quarterly earnings call, said Raytheon has removed from its books a $519 million projected sale of an “offensive weapon system” to a “customer in the Middle East...we can't talk about.” 

On the same call, CFO Toby O’Brien said the sale involves an “offensive munition.”

The scale of the deal indicates that the execs were referring to the planned sale of some 7,500 Paveway bombs to Saudi Arabia. Last April, Raytheon said in a regulatory filing that its arms sales could be hurt by lawmakers’ concerns about Riyadh’s role in Yemen’s civil war and about the Saudi crown prince’s involvement in the murder of a U.S.-based Saudi journalist. Still, in December, Bloomberg reported that the Trump administration was moving ahead with the sale.

“We had assumed that we were going to get a license to provide these offensive weapon systems to our customer,” Hayes said. “With the change in administration, it becomes less likely that we're going to be able to get a license for this. And so we appropriately decided that we could no longer support the booking of that contract.”

During his Senate confirmation hearing last week, now-confirmed Secretary of State Anthony Blinken said the Biden administration would “end our support for the military campaign led by Saudi Arabia in Yemen.”

Still, Hayes said the company does not anticipate issues selling defensive weapons, like Patriot missile interceptors, and other types of arms in the region.

“Look...peace is not going to break out in the Middle East anytime soon,” Hayes said. “I think it remains an area where we'll continue to see solid growth.”

Similarly, Lockheed Martin CEO Jim Taiclet expected foreign arms sales to remain a priority in the Biden administration.

“As far as international business, including foreign military sales, the tendency of the people in the Biden administration [and] in the president's own statements, reiterate his view that alliances are important that they need to be cultivated, and that they have real value in deterrence and national defense,” Taiclet said. “I do think that we'll have a more open environment for [foreign military sales] and direct commercial sales to our international partners.”

Taiclet said foreign weapon sales are a way to generate American jobs and stimulate the U.S. economy.

“If jobs and the economy are important, the promotion of international defense sales, one would surmise, would also be important,” Taiclet said Tuesday morning on Lockheed’s quarterly earnings call.

While arms sales create jobs growth, a 2019 Center for International Policy report said those claims, particularly during the Trump administration, were greatly exaggerated. 

Still Taiclet, a former U.S. Air Force pilot, said arms sales are a way to deepen relationships with an ally.

“I can tell you that there's no better way to get a tighter bond with an ally than sell them jet fighter aircraft,” he said. “All the way back in the mid-[19]80s, when I was in pilot training, we had Saudis in our class, for example.”