German halt in Saudi arms sales hurting UK industry: Hunt

BERLIN (Reuters) - Britain has urged Germany to exempt big defense projects from its efforts to halt arms sales to Saudi Arabia or face damage to its commercial credibility, the German magazine Der Spiegel reported on Tuesday. Germany said last November it would reject future arms export licenses to Saudi Arabia over the killing of Saudi journalist Jamal Khashoggi. It has not formally banned previously approved deals but has urged industry to refrain from such shipments for now. Germany accounts for just under 2 percent of total Saudi arms imports, a small percentage internationally compared with the United States and Britain, but it makes components for other countries' export contracts. That includes a proposed 10-billion-pound deal for Riyadh to buy 48 new Eurofighter Typhoon fighter jets from Britain. "I am very concerned about the impact of the German government's decision on the British and European defense industry and the consequences for Europe's ability to fulfill its NATO commitments," British foreign minister Jeremy Hunt wrote in a letter to his German counterpart Heiko Maas, Spiegel reported. Hunt said British defense firms would not be able to fulfill several contracts with Riyadh including the Eurofighter Typhoon and the Tornado fighter jet, both of which are made with parts affected by the halt in deliveries to Saudi Arabia. "This letter shows how Germany's arms export practices are costing it the ability to partner with its closest European allies," Hans Christoph Altzpodien, head of Germany's defense industry association BDSV, told Reuters. Reuters has not seen the letter and a spokesman for the German foreign ministry declined to comment. LOSSES In his letter, Hunt also wrote that the German government's decision to halt arms exports to Saudi Arabia would result in a loss of 2.3 billion euros' worth of revenues for German defense firms by 2026. A top Airbus official said on Friday that the German halt in exports to Saudi Arabia was preventing Britain from completing the sale of 48 Eurofighter Typhoon warplanes to Riyadh, and has delayed potential sales of other weapons such as the A400M military transport. Hunt's letter comes as Britain prepares to leave the European Union on March 29, in the biggest shift in its commercial and diplomatic relations with the continent in decades. It has still to reach a deal with the EU on the terms of its exit, raising the risk of serious economic disruption. (Reporting by Tassilo Hummel and Sabine Siebold; Writing by Michelle Martin and Thomas Escritt; Editing by Madeline Chambers and Gareth Jones)