The three-year contract, which includes training Saudi pilots and technicians in the United Kingdom, could be worth as much as $800 million.

The Saudi deal gave BAE a morale-boosting shot in the arm as it grappled with the investigation by British authorities into allegations the company made secret payments of some $160 million to South African politicians to secure a $3.6 billion contract for Hawk trainer jets in 1999.

BAE also faces possible prosecution in the United Kingdom over other bribery allegations involving major arms sales to Tanzania, the Czech Republic and Romania between 2001 and 2003.

The company, one of the world's biggest arms manufacturers, has denied all the allegations by the SFO, which said Oct. 2 it planned to file charges against BAE Systems over the alleged corruption after lengthy investigations.

The company is under pressure to settle the case, but, according to the BBC, could face penalties of between $800 million and $1.6 billion.

BAE was saved from prosecution over the allegations of bribing prominent figures in Saudi Arabia, including at least one member of the royal family, in 2006 when Prime Minister Tony Blair ordered the SFO to abandon the investigation.

That controversial decision by Blair, shortly before he stepped down as British premier, followed intense pressure on Britain's Labor government by the Saudis.

Their hefty arms purchases from the United Kingdom over the years have sustained Britain's arms industry.

The alleged bribery concerned a BAE deal for Tornado strike jets and other weapons systems along with support contracts with Riyadh worth $85 billion.

Blair claimed that the decision to drop the SFO probe was made because it could jeopardize British intelligence ties with Saudi Arabia at a critical period in the war against terror.

Blair was widely criticized at home for what was seen as bowing to the demands of the Saudi royals. The decision led to a severe rebuke of the government by Britain's High Court.

BAE builds the Typhoon fighters ordered by Saudi Arabia at its plant in Lancashire in northern England in partnership with three other European countries, Germany, Spain and Italy. BAE hopes to win other aircraft orders from Saudi Arabia.

The Royal Saudi Air Force recently took delivery of the first four of its Tranche 2 Typhoons and has begun flying operations.

The support contract was made under the Salam Support Solution, an arrangement that was part of the sale agreement signed Dec. 21, 2005.

BAE Systems won contracts worth more than $1.5 billion to service Typhoon and Harrier jump-jets for Britain's Royal Air Force earlier this year.

However, there has been widespread concern in the United Kingdom that if BAE is prosecuted by the SFO over the alleged bribery in the African and East European contracts, Britain's defense capabilities could be jeopardized.

Sir Menzies Campbell, former leader of Britain's Liberal Democrats, said earlier this month that the potential implications of the BAE investigation were "serious, not just for BAE but for Britain's defense capacity" that includes a new class of aircraft carriers.

"The company is the principal contractor in the programs for the Eurofighter, the aircraft carriers and Joint Strike Fighter (with the United States) which is to go on them, and many other significant procurement projects," he said.

"These developments have a considerable impact on all of these projects."

earlier related report
'New players' reported in Yemen war
Sanaa, Yemen (UPI) Oct 13 - The government's war against Shiite tribal rebels, who Sanaa claims are backed by Iran, drags on in a savage stalemate that may be widening with the reported involvement of fighters from Hezbollah, Tehran's Lebanese proxy.

Claims by the government that it is beating the rebels in the mountains of Saada province along the border with Saudi Arabia are wearing a little thin as the fighting escalates.

Amid stepped-up army operations, the Shiite Zaidi rebels, known as Houthis after the clan that leads them, claim they shot down two air force strike jets in four days earlier this month -- a MiG-21 on Oct. 2 and a Sukhoi Su-22 on Oct. 5.

Sanaa admits it lost the jets but insists both crashes were the result of technical failures rather than ground fire. That is entirely possible, given the air force's lack of combat experience, particularly in such rugged terrain, and the considerable age of its aircraft, some of them designed in the Korean War era.

However, on Oct. 7 U.S.-based security consultancy Strategic Forecasting quoted sources in Lebanon's Iranian-backed Hezbollah as saying that their guerrillas had shot down the attack planes with Iranian-manufactured Misagh-1 shoulder-fired surface-to-air missiles.

These claims have not been verified, and Hezbollah has made no comment on them.

But if they are correct, the involvement of Hezbollah would mark a serious escalation in Tehran's clandestine activities in the Middle East and the Saudi-dominated Arabian peninsula in particular.

It would also resonate in Lebanon, where Hezbollah confronts Israel.

The Israelis have claimed that Hezbollah has been supplied with anti-aircraft missiles by Iran via Syria. But there has been no sign of such weapons, even though Israeli aircraft and reconnaissance drones violate Lebanese airspace practically every day.

Using such weapons against the Israelis would trigger severe retaliation against Hezbollah, and possibly other targets in Lebanon. But having Hezbollah fighters use them in Yemen would provide the Shiite organization with invaluable combat training for future use against Israeli warplanes.

The possible deployment of Hezbollah personnel in Yemen would suggest that Tehran is prepared to up the ante in its confrontation with its Arab neighbors in the Gulf and the Levant.

Suspected Hezbollah operatives are currently on trial in Cairo for planning sabotage attacks on the Suez Canal and other strategic targets in Egypt.

Hezbollah has admitted that the group's leader is its man but claims his mission was to help get weapons to Hamas in the Gaza Strip to fight Israel.

Two alleged Hezbollah activists were sentenced to prison terms in Baku, capital of Azerbaijan, recently for plotting to blow up the Israeli Embassy there to avenge the February 2008 assassination of Hezbollah's legendary operations chief, Imad Mughniyeh, in Damascus, Syria.

The United Arab Emirates has in recent weeks deported several hundred Lebanese Shiites for "security reasons." Those who returned to Lebanon said they were thrown out because they refused to spy on Hezbollah for the emirates' intelligence services.

In Iraq, U.S. forces have arrested Hezbollah veterans operating with Iranian-backed Shiite groups. One was a senior Hezbollah figure named Ali Mussa Daqduq, a 24-year Hezbollah veteran who once headed the security detail protecting Sheik Hassan Nasrallah, the organization's leader.

Saudi Arabia is increasingly concerned that the fighting in Yemen, along with growing separatist agitation in the south, a resurgent al-Qaida in the eastern sector and a steadily degrading economy will mean the eventual collapse of the state.

The rebels claim Saudi warplanes have supported the Yemeni army. Riyadh denies that, but analysts believe it's only a matter of time before the Saudis do get involved militarily.

Egypt, another adversary of Iran, also backs the Sanaa government and has been reported to have airlifted in military supplies.

The war that began in 2004 as a "quasi-police operation" against unruly tribesmen "has become increasingly complex and multi-layered," according to a recent analysis by the International Crisis Group, a Brussels-based think-tank.

"As mutual grievances accumulated and casualties mounted," it said, "the conflict brought in an ever-growing numbers of actors … covering a widening area and involving foreign actors under the backdrop of a regional Cold War" that pits Saudi Arabia against Iran.

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