UK defence sales to Oman: Tornado aircraft

This file concerns the negotiations for the proposed sale of Tornado military aircraft to Oman. It contains memoranda and correspondence concerning:

• The improper administration of loans to the Government of Oman by Morgan Grenfell and Company Limited
• Problems caused by the unwillingness of the German Government to provide credit guarantees
• The negotiations between British Aerospace and the Government of Oman concerning the sale
• Omani requests for ‘generous terms’ as a gesture of good will indicative of the special UK-Oman relationship
• Competition with the US F16 aircraft; and concerns over the increasing US dominance in defence exports to the Arabian Peninsula
• The threat to the deal caused by economic stagnation in Oman; and the financial difficulties that befell the Omani Government after purchasing Jaguar aircraft
• The protracted dispute between the MOD, the FCO and the Treasury concerning revising the credit terms for the sale; and Defence Secretary Michael Heseltine’s appeal to Chancellor Nigel Lawson to break the deadlock
• The problem of the credit terms offered to Jordan for Tornado being far more generous than those offered to Oman
• The importance of the sale in maintaining British supremacy in arms exports to Oman; and the risk of failure in Oman damaging sales prospects in Saudi Arabia and Jordan
• Managing director of British Aerospace Sir Raymond Lygo’s appeal to HMG to improve the financial terms
• The threat posed to the deal by a comprehensive spending review in the Omani Ministry of Defence
• The Sultan of Oman Qaboos Bin Saeed's tentative decision to purchase eight Tornado rather than twelve as previously forecast, in the face of continuing American competition
• Heseltine's appeal to the Cabinet to support his proposals for the credit package; and the prospect of Prime Minister Margaret Thatcher intervening with Sultan Qaboos during his visit to the UK.