By Jim Wolf
WASHINGTON (Reuters) - The United States will sell $29.4 billion in fighter jets to Saudi Arabia in a deal the White House said would support more than 50,000 jobs and help reinforce regional security in the Gulf amid mounting tensions with Iran.
The sale covers 84 new Boeing F-15 fighters with advanced radar equipment and digital electronic warfare systems plus upgrades of 70 older F-15s as well as munitions, spare parts, training, maintenance and logistics.
While the sale was previously approved by Congress, the White House announcement comes at a moment of rising tensions in the Gulf region and illustrates deepening defense ties between Washington and the key oil supplier.
"This agreement serves to reinforce the strong and enduring relationship between the United States and Saudi Arabia," said Andrew Shapiro, the assistant U.S. secretary of state for political-military affairs.
"It demonstrates the U.S. commitment to a strong Saudi defense capability as a key component to regional security."
Both the United States and Saudi Arabia, which sees Iran as a significant potential threat, are worried about Iran's nuclear program. Iranian officials this week repeated threats to close the Strait of Hormuz in response to mounting U.S. and European economic sanctions.
The sale also comes as President Barack Obama prepares to accelerate his campaign for reelection in November 2012, a campaign likely to be fought over the U.S. economy and job growth.
A White House spokesman said the Saudi arms sales would give the U.S. economy a $3.5 billion annual boost and help bolster exports and jobs.
Saudi Arabia was the biggest buyer of U.S. arms from January 1, 2007 through the end of 2010, with signed agreements totaling $13.8 billion, followed by the United Arab Emirates, with $10.4 billion, according to a December 15 Congressional Research Service report.
Boeing said the deal marked its "enduring partnership" with Saudi Arabia, which already operates a fleet of existing Boeing F-15s, Apache helicopters, AWACS, and special mission aircraft.
"Boeing views Saudi Arabia as a market with great potential and has made it a priority to invest in Saudi Arabia's aviation industry while working to strengthen local technical and vocational training programs and institutions," Boeing Chief Executive Jim McNerney said in a statement.
Boeing shares were up 1.07 percent at $74.04 in early afternoon trading on the New York Stock Exchange.
DELIVERTY OF NEW PLANES TO START IN 2015
The Obama administration cleared with Congress more than a year ago the potential sale of more than $60 billion in military hardware to Saudi Arabia over 10 to 15 years, including the F-15s, helicopters and related equipment and services.
The Saudi buildup, part of a wider U.S. buildup of its regional friends and allies, could eventually help offset the departure this month of the last U.S. combat troops in Iraq.
U.S. officials said the upgrades of the existing F-15s would begin in 2014 and the first new aircraft would be delivered to Saudi Arabia in 2015.
Shapiro said the deal was aimed at bolstering Saudi Arabia's overall defense capability in an uncertain region. "In the Middle East right now there's a number of threats. ... Clearly one of the threats that they face, as well as other countries in the region, is Iran," Shapiro told a news briefing.
"But this is not solely directed towards Iran. This is directed toward meeting our partner Saudi Arabia's defense needs."
Gregory Gause, a Saudi Arabia expert at the University of Vermont, said the announcement of the fighter jet sale was a signal that the United States wants to contain Iran's influence in the region, but would not produce any quick power shift.
"This is more of a signal than anything practical, because these planes aren't going to be delivered anytime soon," he said. "But it's an effort by the administration to say we're going to build up local allies like Saudi Arabia, even in the wake of our withdrawal from Iraq because we want to contain Iranian influence."
U.S. arms sales to Saudi Arabia often raise concern in Israel, but Shapiro said the Obama administration believed the new advanced warplanes would do nothing to lessen Israel's comparative military advantage in the region.
"Our evaluation is that these sales will not have an impact on Israel's qualitative military edge," he said.
(Additional reporting by Laura MacInnis in Honolulu and Andrew Quinn and Toby Zakaria in Washington, Kyle Peterson in Chicago, editing by Todd Eastham)