INTERNATIONAL

Blair defends deal

Hasan Suroor

LONDON: Faced with growing pressure to explain his controversial decision last month to stop a corruption investigation into the BAE Systems' arms deal with Saudi Arabia, Prime Minister Tony Blair said on Tuesday if the inquiry had gone ahead it would have had a "devastating'' effect on Britain's relations with Saudi Arabia, a key ally in the war against terrorism.

Mr. Blair was forced to defend his action after The Guardian reported that Britain's intelligence agency MI6 had "challenged'' Government claims that the investigation was threatening national security.

The newspaper said MI6 chief John Scarlett had "refused'' to sign up to a Government dossier which claimed that the Saudi Government had threatened to stop sharing terror-related intelligence with Britain if the investigation continued. It quoted an official as saying there was "nothing to suggest'' that Riyadh had actually warned: "If you continue with this inquiry, we will cut off intelligence.''

Asked about it at his monthly press conference in Downing Street, Mr. Blair declined to comment on the reported rift between MI6 and his Government but insisted that he dad done the right thing by calling off the two-year long inquiry. He said he had "no doubt whatsoever'' that had the investigation gone ahead the result for British-Saudi relations would have been "devastating.''

The inquiry by the Serious Fraud Office was prompted by allegations that the BAE Systems created a "slush fund'' through its offshore accounts to bribe Saudi officials to win a lucrative arms contract in the 1980s.

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