Why Would America Sell Saudi Arabia 15,699 Dangerous Missiles?

In what has to be hands-down the biggest development in defense news this week, Saudi Arabia just asked America to sell it 15,000 rockets.

Foes TOW the line when faced with Raytheon's missiles. Source: Wikimedia Commons

More precisely, 15,699 rockets.

Or even more precisely:

  • 9,650 of Raytheon's (NYSE: RTN  ) BGM-71 2A Tube-launched, Optically tracked Wire-guided (TOW) Radio-Frequency (RF) missiles
  • 4,145 BGM-71 2B TOW Aero RF missiles
  • 1,000 BGM-71 2A TOW missiles
  • 750 BGM-71 2B TOW missiles
  • and an assortment of 154 "fly to-buy" TOW2B and TOW2A missiles.

The U.S. Defense Security Cooperation Agency (DSCA) notified Congress of the planned arms sale on Thursday and, by law, Congress now has 15 days to either reject or approve the sale. If Congress does nothing, the sale is deemed approved and may proceed. At which point we're going to have to ask... at whom, exactly does the Royal Saudi Land Force plan to point these missiles?

Are there 15,000 tanks lumbering around somewhere in the Middle East, that Saudi Arabia wants to blow up? Or is there just one tank out there that's bugging them... and the Saudis are just really bad shots?

Opinions on the question probably differ. According to Middle East news organization Al-Jazeera, for example, the entire nation of Israel owns fewer than 4,000 tanks. Iran has less than 2,000. Most of the tanks in Iraq, the Saudis' usual sparring partner, have already been blown up... although Iraq has embarked upon a multibillion-dollar spending spree to rebuild its armed forces with dozens of M1 Abrams tanks and Stryker APCs from General Dynamics (NYSE: GD  ) .

This still all adds up to fewer than 6,000 tanks for the Saudis to shoot at, however. So while according to DSCA, the express purpose of this sale is to "support the Ministry of the National Guard's defense and counter-terrorism missions," you have to wonder if a few (or more than a few) of these missiles might not somehow find their way into the hands of the combatants fighting to overthrow the regime of Bashar al-Assad in Syria.

Foolish takeaway
For the time being, this is all just speculation. One thing's for certain though: If this deal goes through, it will mean well in excess of $1 billion in revenues for the manufacturer of the TOW: Raytheon. That's more than 4.4% of the company's annual revenues.

With Raytheon earning a net 8% profit margin on these sales, this deal is good news for Raytheon's shareholders -- whomever the Saudis point their new missiles at, or even if they point them at no one at all.

Downtime for a TOW team. Source: Wikimedia Commons

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Read/Post Comments (19) | Recommend This Article (12)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 08, 2013, at 2:50 AM, cwindom wrote:

    For the same reason Russia sells weapons to Syria and north Korea......

  • Report this Comment On December 08, 2013, at 7:47 AM, laicajansen wrote:

    good question , cause the Saudi Wahhabi , AL Qaeda , MB pets need more weapons and USA can not sell them direct ? A study conducted by the NGO Freedom House found Wahhabi publications in mosques in the United States. These publications included statements that Muslims should not only "always oppose" infidels "in every way", but "hate them for their religion … for Allah's sake ... since I am an infidel , since most of us are in Wahhabi eyes , including secular Muslims , and even some Sunni are called "to soft" by them ... would make very little sense, then again , lately the USA regime seems to make very little sense .

  • Report this Comment On December 08, 2013, at 8:11 AM, Frank921 wrote:

    COngress has 15 days and in-action is deemed approval...what great timing as they head to I guess again Congress can't be blamed one way or another

  • Report this Comment On December 08, 2013, at 8:11 AM, rangerchuck wrote:

    Because the US has two better missiles, the Hellfire (for the AH-60) longer range and more killing power, and the Javlin (ground) has a shorter range but can kill by top attack. The TOW is an old system and the newer systems do the job better and cheaper.

  • Report this Comment On December 08, 2013, at 8:19 AM, DaSky wrote:

    Because the O Regime is filled with incompetent neo-Marxist revolutionaries!

  • Report this Comment On December 08, 2013, at 9:14 AM, Grandpastu wrote:

    Why would the US sell so many missiles to the Saudis? Raytheon's CEO needs a new yacht!

  • Report this Comment On December 08, 2013, at 9:15 AM, Jman1259 wrote:

    Because we are greedy idiots with the foresight of gnat.

  • Report this Comment On December 08, 2013, at 9:40 AM, JePonce wrote: the same time, attempt to disarm law abiding U.S. citizens!

    Answer: They fear not the Saudis. They do fear U.S. citizens whom they are placing in chains.

  • Report this Comment On December 08, 2013, at 10:25 AM, daddio wrote:

    If the Military Industrial Complex is to continue we must arm someone.

  • Report this Comment On December 08, 2013, at 12:28 PM, bjensen07 wrote:

    Because the American Government likes to arm everyone (except in the case of it's own citizens, in which case they would choose to disarm them)

  • Report this Comment On December 08, 2013, at 12:30 PM, Wacked wrote:

    Saudi just like Japan before World War II is building up stock piles of munitions to use in their US made tanks and weapon systems....once Russia at the Saudis request is well entrenched in the Middle East and on Saudi soil our US congress and Government will wake up...yeap a bit too late. I fully expect the Saudis early next year will be buying missiles and munitions for their US Made aircraft and support aircraft also..... Besides once the russians are there enmass the Saudi's over time will phase out American Warefare flavor of the Russian Warfare Machine.

  • Report this Comment On December 08, 2013, at 1:02 PM, recon4wrd wrote:

    Because 15,700 just wasn't in the budget.

  • Report this Comment On December 08, 2013, at 1:39 PM, plange01 wrote:

    america has been without a president for over five years and is broke and failing.lately the country has been extorting money from banks.selling weapons is just another small step to try and keep the drying country from collapsing...

  • Report this Comment On December 08, 2013, at 1:40 PM, TMFDitty wrote:

    Clever. Recon. I admit -- I recounted the numbers more than a few times to make sure I hadn't missed one.


  • Report this Comment On December 08, 2013, at 5:51 PM, Pablocree wrote:


  • Report this Comment On December 08, 2013, at 7:09 PM, thumber wrote:

    Some will be sold by them for huge profits to only God knows who.

  • Report this Comment On December 09, 2013, at 12:45 AM, Historybuff wrote:

    This article is fear mongering. First off, how many tanks your potential adversaries have is irrelevant here. They could attack with all their armor in a single spot, while your nation has to maintain anti-tank capacity equally among your forces. Secondly, the success of your armed forces with various technologies depends exclusively on the level of training they have. Which with systems like this means actually firing the weapon on a shooting range. Fancy that. And as soldiers rotate out of the army and new recruits rotate in, you have to consistently burn ammo to build and maintain skills. (ammo also has a shelf life). Lastly, the TOW system requires technical training to use, is expensive, and requires a tripod for infantry use; making it unsuitable for hit and run guerrilla warfare. If the Saudis wanted to supply weapons to overthrow Assad, they would send RPG-7s. Dirt Cheap, Light Weight (one man portable) and easy to use.

  • Report this Comment On December 09, 2013, at 4:45 AM, tigerade wrote:

    Capitalism is selling weapons to both sides of a conflict.

  • Report this Comment On December 13, 2013, at 11:31 AM, TMFDitty wrote:
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