FUELLING THE DEBT Saudi Arabia's plan to pay for 132 planes with
oil has been hit by the slump in the price of crude.
Oil barter agreements have long been the resort of cash-hungry Opec
nations such as Nigeria or Gabon. But Saudi Arabia's deal with the
UK Defence Ministry to pay for military aircraft with oil opened a new
era. And it raised the question of when will the desert kingdom come to
the Euromarkets to borrow?
Saudi Arabia signed a $7.5 billion contract with the MoD for 132
aircraft, including 72 Tornado jet fighter/bombers made by the UK-West
German-Italian consortium Panavia. The payment is to be effected
through the supply of 300,000 barrels of oil a day to British Petroleum
and Shell. Proceeds from the sale of the oil are paid into a London
account of Lloyds Bank. But Riyadh's hopes of paying off the debt
in two years...
