Thursday, Mar 22, 2012

-- Swedish prosecutors launch probe into alleged Saudi Arabian arms affair at country's defense research agency

-- Matters refer to a report the agency set up a private company to help Saudi Arabia build a weapons factory

-- The affair has caused debate over weapon exports in a country which is the largest exporter of arms by capita

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   By Katarina Gustafsson and Niclas Rolander 
   Of DOW JONES NEWSWIRES

STOCKHOLM (Dow Jones)--The Swedish Prosecution Authority Thursday announced there are suspicions a crime has been committed at the Scandinavian country's defense research agency in connection with an alleged Saudi Arabia arms affair.

Jan-Olof Lind, director general of the state agency, said in a statement that the agency has notified a prosecutor that a crime may have been committed within the agency. The prosecutor has now launched a preliminary investigation into the matter where it will determine whether or not a crime has been committed.

"At this point in time, we can't say anything more about what the allegations are," Agnetha Hilding-Qvarnstrom, deputy chief prosecutor at the prosecution authority for security said in a statement, referring to the confidentiality surrounding the investigation.

The matter has received a lot of media attention and relates to a report by Swedish Radio earlier this month that the defense research agency plans to assist Saudi Arabia in building an advanced weapons-making factory.

The report, supported by official documents and confirmed by some of the people involved in the deal, shows the government agency established a private company to help Saudi Arabia build facilities for arms production. Swedish Radio claimed the agency set up the shell company to avoid any direct links between itself and the Saudi government.

The revelations have sparked harsh criticism from politicians and organizations like the Swedish Peace and Arbitration Society, or SPAS, which said Sweden is "siding with the oppressors."

"It is not taking the side of those who fight for democracy and human rights. I find it highly remarkable that Sweden, through these collaborations, legitimizes and upholds oppression and hinders democratic development," said Rolf Lindahl, political secretary at SPAS.

Critics who argue Sweden shouldn't export arms to dictatorships want to see the cooperation between the countries end and Sweden is reviewing what nations it will export arms to.

Sweden's military cooperation with Saudi Arabia is based on a memorandum of understanding signed in 2005. The agreement is up for review every five years and could potentially be terminated in 2015.

In 2011, Sweden sold arms valued at 2.9 billion kronor ($428.1 million) to Saudia Arabia, which was the second-largest purchaser of weapons from the Scandinavian country that year.

Scandinavian countries' exports of military equipment totaled a record-high SEK13.7 billion in 2010, making Sweden the largest arms exporter per capita, according to SPAS.

Sweden's large military industry is a consequence of its cold-war policy of neutrality, which necessitated a homegrown production capability which could supply arms to a large-scale military defense aimed at protecting the country from a potential Soviet invasion.

After the cold war ended, Sweden's military industry expanded its client base. In addition to Saudi Arabia, last year's biggest Swedish arms buyers included Thailand, India and Pakistan.

-By Katarina Gustafsson, Dow Jones Newswires +46-8-5451-3097; katarina.gustafsson@dowjones.com

(END) Dow Jones Newswires

22-03-12 1140GMT