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Last Updated: Tuesday, 16 January 2007, 17:48 GMT
PM defends Saudi probe decision
There were fears a multi-billion pound deal would be lost
Tony Blair has said dropping a fraud probe into a Saudi arms deal was not a "personal whim" but based on "the judgement of our entire system".

Mr Blair was responding to reports in the Guardian newspaper that MI6 had refused to endorse his claim the probe would harm the UK's national interest.

He refused to comment on claims of a rift between MI6 and ministers.

But he insisted continuing with the probe would have had a "devastating" effect on relations with a key ally.

He said Britain needed Saudi Arabia in the fight against terrorism at home and abroad.


Asked if the secret intelligence services knew - at the time the probe was dropped - of any specific threat by the Saudis to cut intelligence links with the UK, Mr Blair said: "I won't get into discussing the intelligence aspect of this.

"But I can absolutely assure you that there is no doubt whatever in my mind - and I think of those of any of the people who have looked at this issue - that had we proceeded with this the result would have been devastating for our relationship with an important country."

A Foreign Office spokesman said the Guardian article "contained numerous errors".

He added: "The claim that there were no National Security considerations behind the decision to halt the SFO [Serious Fraud Office] inquiry was wrong."

The spokesman also said the Secret Intelligence Service had "shared the concerns within government over the possible consequences to the public interest of the SFO investigation".


Mr Blair rejected the claim that the UK did not need the Saudis in the fight against terrorism "as much they need us".

"I think that had we proceeded with this investigation, it would have significantly materially damaged our relationship with Saudi Arabia," Mr Blair told reporters at his monthly news conference in Downing Street.

"That relationship is of vital importance for us fighting terrorism, including here in this country.

"It would have done damage to a major strategic partnership right at the moment when we need that strategic partnership, in terms of Iraq and other issues.

"And all of that leaves aside the issue of the fact that we would have lost thousands of UK jobs."


Mr Blair said he knew he would be "heavily criticised" for the decision but he believed it was the "right judgement".

"This isn't just a personal whim of mine but the judgement of our entire system and I can assure you from everything I know that it was it was extremely soundly based," he added.

The Guardian says the Serious Fraud Office (SFO) was close to finding prosecutable evidence when Mr Blair ordered the end of the investigation.

Mr Blair denied the move sent a signal to developing countries that the UK tolerated corruption, saying Britain had "done more than any other country, probably" to tackle this issue.

Jobs fears

When he announced the halting of the Serious Fraud Office inquiry last month, Attorney General Lord Goldsmith said the secret intelligence service agreed Mr Blair that national security was in jeopardy because the Saudis were threatening to withdraw intelligence co-operation.

The Guardian reported that MI6 chief John Scarlett had refused to sign up to an early version of the dossier which said MI6 "endorsed" Mr Blair's national security claim.

One official is quoted in the newspaper as saying there was "nothing to suggest" the Saudis actually warned they would cut off intelligence.

According to the paper, the language used in the dossier has since been altered.

The Foreign Office spokesman said: "This drafting process reflects routine government practice."

Mr Blair said he was "not aware of any unhappiness" with Lord Goldsmith's statement.


But Liberal Democrat leader Sir Menzies Campbell said: "If these reports are true, they seriously undermine the government's case for ending the investigation into allegations of corruption involving BAE and Saudi Arabia.

"In particular they undermine the reliability and credibility of the prime minister who publicly took responsibility for the decision and publicly sought to justify it."

The Saudis were reportedly angry that their royal family was being dragged into the SFO probe.

The Organisation for Economic Co-operation and Development (OECD) has launched its own inquiry into whether the decision breached Britain's responsibilities to root out corruption.

Making bribes has been a criminal offence since 2002, after the UK signed up to an international convention.

Under the terms of the OECD anti-corruption treaty, countries can not use economic reasons - such as job losses - as a reason for terminating inquiries.

Blair responds to questions during his monthly briefing

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