RIYADH, Saudi Arabia—American defense giant RTX and a Saudi weapons firm were heading toward a multibillion-dollar deal when it was abruptly called off early this year. The reason, say people familiar with the talks, was RTX’s concerns that its Saudi partner’s companies were pursuing business with sanctioned Chinese and Russian entities. That unease was a deciding factor for an advisory board of retired American military officers to resign from the Saudi company, Scopa Defense, the people said.
Scopa fired its American chief executive who had raised the sanctions concerns with his company’s owner and U.S. officials. And now other major Western defense companies are reconsidering early-stage agreements primarily because of the concerns around engagement with Russian and Chinese entities, the people said.
The failed talks with RTX, formerly known as Raytheon Technologies, demonstrate a challenge Saudi Arabia faces in pursuing diplomatic and business relationships with China and Russia that Washington says jeopardize U.S. national security. Doing business with sanctioned companies could undermine U.S.
efforts to squeeze Russia and China financially and heighten the risks that Western companies would face sanctions themselves. It also raises the specter of Moscow and Beijing obtaining secret U.S. military technology.
The breakdown of RTX-Scopa talks also shows the challenges for countries that want to maintain relationships with both the U.S. and its top global rivals when Washington prefers its partners and allies to take sides. Saudi Arabia was once firmly in the Western camp, but since Russia’s invasion of Ukraine, it has expanded ties with other powers, managing the oil market in alignment with Moscow and entering
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