Killing of Khashoggi tests US defense industry as backlash builds on Capitol Hill
By BETH REINHARD, TOM HAMBURGER AND EMMA BROWN | The Washington Post | Published: November 21, 2018
The powerful U.S. defense industry is facing a rare challenge to its influence on Capitol Hill as support for arms sales to Saudi Arabia has rapidly eroded following the killing last month of journalist Jamal Khashoggi at the hands of Saudi government operatives.
The defense industry's typically aggressive lobby has gone quiet as gruesome details of Khashoggi's death have leaked and American intelligence officials have laid blame at the feet of Saudi Crown Prince Mohammed bin Salman.
Even as President Donald Trump has reiterated his support for continued sales of U.S. weapons to the kingdom, congressional opposition to those sales and to U.S. support for the Saudi-led war in Yemen has mounted in recent weeks - testing the power of an industry that has sold tens of billions of dollars' worth of weapons systems to the kingdom since the 1950s.
Growing bipartisan support for Senate legislation to cut off the arms sales marks a historic disruption in a seemingly inviolable arms-for-oil trade relationship that stretches back decades and is an unusual setback for one of the most influential lobbies in Washington.
In the coming weeks, key senators are expected to push for a vote on a measure that would impose sanctions on Saudi officials responsible for Khashoggi's death and suspend many weapon sales to Saudi Arabia until it ceases airstrikes in Yemen that have killed tens of thousands of civilians.
The bill represents one of the first major breaks between congressional Republicans and the White House, which has embraced Saudi Arabia as a key Middle Eastern ally - a strategy driven by Jared Kushner, Trump's son-in-law and senior adviser, who forged a strong personal relationship with the crown prince.
But Trump's staunch support for the kingdom in the face of the CIA's conclusion that Mohammed ordered the assassination of Khashoggi - a Washington Post contributing columnist - has triggered a backlash on Capitol Hill amid intensifying opposition to the war in Yemen.
In an interview Tuesday, Sen. Lindsey Graham, R-S.C., a Trump confidant who previously opposed efforts to restrict arms sales to Saudi Arabia, suggested lawmakers might tie federal funding to Saudi sanctions. He is co-sponsoring the bipartisan Senate measure, which would suspend licenses for some weapons that had been previously approved.
"When it comes to the crown prince, it is not wise to look away," said Graham, calling the crown prince "a wrecking ball" on the global stage.
Other lawmakers who have backed arms deals with Saudi Arabia in the past and are now reconsidering their support include Sen. Mark Warner, D-Va., Rep. Eliot Engel, D-N.Y., and House Minority Whip Steny Hoyer, D-Md., according to recent votes and congressional aides.
In the House, lawmakers are signing on to several proposals that would curtail Saudi deals, including one offered by Rep. Jim McGovern, D-Mass., that would mandate updates on the investigation into Khashoggi's death before any new military sales to Saudi Arabia could be considered.
McGovern's district is home to Raytheon, which sells hundreds of millions of dollars' worth of weapons to Saudi Arabia each year and whose corporate PAC has been a top campaign donor for McGovern in recent years.
"I care very much about jobs," said McGovern, who was an early critic of the war in Yemen. "But I don't want to create jobs by selling weapons to governments that murder journalists in cold blood and then lie about it."
The defense industry has long had a guiding hand on American foreign policy, facilitated by a parade of former military and government officials moving between corporate jobs and key State Department and Defense Department posts. U.S. defense companies have spent between $125 million and $130 million annually on lobbying in recent years, plus tens of millions more on contributions to federal candidates, according to the nonpartisan Center for Responsive Politics.
In a sign of the industry's muscle, Congress has only once voted to block a foreign arms deal through a key oversight tool known as a joint resolution of disapproval, according to a Congressional Research Service report. That effort occurred more than three decades ago, in 1986, and the measure was vetoed by President Ronald Reagan.
Since the start of the war in Yemen, the defense industry - working alongside lobbyists for Saudi Arabia - has successfully beat back congressional efforts, supported by human rights groups, to end or curtail U.S. support for the air war in that conflict.
For now, the defense lobby is keeping a low profile, stressing the value of a strong U.S.-Saudi relationship while strategizing how to proceed, according to people familiar with the approach. Industry lobbyists said they are closely monitoring the dynamics between top Saudi leaders and Trump, who has emerged as the industry's most vocal lobbyist, touting the economic importance of Saudi arms deals.
On Tuesday, the president suggested he might veto any congressional efforts to halt weapons sales. "We're not going to give up hundreds of billions of dollars in orders and let Russia, China and everybody else have them," he told reporters.
Officials from Raytheon, Boeing, Lockheed Martin and General Dynamics all declined The Post's requests for comment on the future of arms sales to Saudi Arabia after Khashoggi's death.
One executive said defense contractors are waiting to see whether the crown prince will be replaced before determining a course of action.
U.S. defense contractors "are really in a duck-and-cover mode, hoping to tie themselves to this as little as possible," said a prominent defense executive who spoke on the condition of anonymity out of concern that publicly discussing the issue would be bad for business. "To say that we're going to support this because we have a few thousand jobs at stake . . . we don't want that," the executive said.
Pressed by Wall Street analysts about the impact of Khashoggi's disappearance last month, officials from Raytheon and another major firm that sells arms to Saudi Arabia, Lockheed Martin, made only brief statements vowing to heed U.S. policy toward one of their top foreign clients.
"I'm pretty confident that we will weather this complexity," Raytheon chief executive Thomas Kennedy said in an earnings call, without mentioning Khashoggi's name.
The conflict that has ravaged one of the world's poorest countries pits the exiled Yemeni government, backed by the Saudi kingdom, against rebels known as Houthis, believed to be bolstered by Iran. U.S. assistance to the Saudi-led coalition, which began in 2015 under President Barack Obama, includes refueling planes, providing intelligence and logistical support - and selling bombs.
Intense criticism of airstrikes on civilians led the administration to halt the sale of nearly $400 million in precision munitions guidance systems to Saudi Arabia in December 2016, at the end of the Obama administration. Three months later, the Trump administration reversed that decision and approved a resumption of weapons sales.
Since then, weapons produced by American companies have been tied to some of the worst episodes of civilian casualties.
The bomb that killed more than 50 people, including at least 40 children, on a school-bus field trip on Aug. 9 was manufactured in the United States by Lockheed Martin, a CNN investigation found. Raytheon bombs have been blamed for other airstrikes that killed civilians, including an April 23 attack on a wedding that left 22 people dead. Post reporters and human rights group have seen evidence that U.S.-made munitions have killed and maimed civilians in Yemen.
As the casualties increased, there were signs that congressional support for the war was slipping.
In mid-September, one month after the school-bus bombing, Raytheon's Kennedy stopped by Capitol Hill to see Sen. Robert Menendez, D-N.J., who had raised concerns about mounting casualties in Yemen, according to a congressional aide.
Few American companies have benefited more from the Yemen war than Raytheon, a $25 billion-dollar-a-year defense giant, analysts said.
And Menendez, exercising his power as the ranking Democrat on the Senate Foreign Relations Committee, was delaying the sale of nearly $2 billion in bomb kits made by the company to Saudi Arabia and the United Arab Emirates, a Saudi ally.
Despite the Raytheon CEO's personal visit, Menendez kept his hold on the sale. He is now sponsoring the bipartisan Senate bill that calls for suspension of many weapons sales to the kingdom.
Asked about Raytheon's contacts with Menendez and other lawmakers, the company said, "As part of the government's decision-making process, Raytheon routinely engages with government officials to provide information and answer questions." Kennedy declined an interview request.
Since Khashoggi's killing, contacts with key congressional offices by Raytheon lobbyists have dropped, according to aides.
"If I was Raytheon or Boeing or Lockheed, I would keep my damn trap shut and my head low because this is bad for the Saudis," said a Republican Senate aide who spoke on the condition of anonymity to be candid about the defense lobby.
In a call with investors last month, Raytheon's chief financial officer emphasized that the company's sales to Saudi Arabia amount to just 5 percent of overall revenue.
But such figures do not illustrate the full extent of the industry's dependence on the kingdom, one of the top foreign markets for U.S. defense companies, analysts said. Saudi Arabia spends billions of dollars every year on American-made weapons systems, and the kingdom has few of the bureaucratic checks and balances that delay big military purchases in the United States.
Lockheed has made selling to foreign governments a key target for growth, with Saudi Arabia a major driver of that effort, according to one defense analyst. A photo of the crown prince during his April visit to a Lockheed facility in Silicon Valley remains on the company's website, even as other corporations have distanced themselves from Muhammed since Khashoggi's slaying.
"The importance of military sales to Saudi Arabia goes far beyond what the annual sales figures would indicate," said Peter Mandaville, a former State Department adviser who teaches at George Mason University. "Those contracts over time keep assembly lines and supply chains open for the major defense contractors. When they are planning for the future, they always keep the Saudis in mind."
Despite the storm of controversy, former defense officials and national security analysts predict that the decades-long relationship with Saudi Arabia is likely to endure because of the kingdom's economic and strategic importance.
Hawk Carlisle, a retired Air Force general who helms the National Defense Industrial Association, an industry trade organization, said in an interview last month that while the United States must respond to Khashoggi's killing, it also must look out for national security.
"As a nation we have to uphold our principles. We need to take appropriate action but not have an overreaction," Carlisle said. "We need to take the long view."
After Khashoggi's death, Raytheon board members convened at the company's Waltham, Mass., headquarters to consider how to handle the fallout and relations with Saudi Arabia, among other issues, according to people familiar with the meeting.
The meeting was led by Kennedy, 63, a former Air Force captain who has traveled the world selling Raytheon's wares to the Saudi crown prince and other international clients. The board advised Kennedy on that day to cancel a planned trip to an economic summit in Riyadh and send others in his place, the people familiar with the meeting said.
A Raytheon spokesman called the board meeting "a regular part of our governance process."
Raytheon's board includes some of the most influential figures in the world of military strategy and intelligence: Stephen Hadley, national security adviser to President George W. Bush; Robert Work, who stepped down last year as deputy defense secretary for planning; Letitia Long, a veteran of the top echelons of U.S. defense and intelligence agencies; and retired Adm. Vernon Clark, former chief of naval operations.
The revolving door has also gone the other way, as former industry supporters have secured key government positions.
At the State Department, Charles Faulkner, a registered Raytheon lobbyist from 2012 to 2016 when he worked for the firm BGR Group, now serves as acting assistant secretary of state in the Bureau of Legislative Affairs.
This fall, his bureau urged Secretary of State Mike Pompeo to certify that Saudi Arabia and the UAE were working to reduce civilian casualties, warning that holding back support for the kingdom - as other State Department officials were urging - could jeopardize future weapon sales, as the Intercept first reported.
Pompeo sided with Faulkner's bureau and allowed the weapons sales to go forward, as the Wall Street Journal first reported.
"Mr. Faulkner has extensive experience working with Capitol Hill," said State Department spokeswoman Heather Nauert. "His previous positions, however, have no bearing on the final certification decision."
As congressional criticism has intensified, there have been signs that the Trump administration's appetite for the war is diminishing. Last week, the United States confirmed it was ending the practice of providing aerial refueling to Saudi-coalition aircraft. And Pompeo and Defense Secretary Jim Mattis recently called for a cease-fire amid warnings the war has left half the population on the brink of starvation.
Mattis said Wednesday that Saudi Arabia and the UAE had ceased airstrikes and other offensive operations over the past three days in Yemen in anticipation of U.N.-sponsored peace talks.
Still, Trump has steadfastly refused to block what he has misleadingly described as $110 billion in military sales to the kingdom. (That figure includes deals that were laid out in nonbinding memos, were previously announced by the Obama administration or are for equipment scheduled for delivery after 2022 or at an undetermined date.)
In a statement Tuesday, Trump questioned the CIA's conclusion that the crown prince ordered Khashoggi's killing and said that his priority is to protect the trade relationship between the United States and Saudi Arabia. The kingdom keeps oil prices at "reasonable levels" and provides cash for U.S. arms that translates into U.S. jobs, Trump said.
"If we foolishly cancel these contracts, Russia and China would be the enormous beneficiaries - and very happy to acquire all of this newfound business," he said. "I understand there are members of Congress who, for political or other reasons, would like to go in a different direction - and they are free to do so."
Many congressional lawmakers - including some Republicans - reacted with disgust at his dismissal of the CIA's assessment.
"I never thought I'd see the day a White House would moonlight as a public relations firm for the Crown Prince of Saudi Arabia," Sen. Bob Corker, R.-Tenn., tweeted.
The dynamic is setting up a showdown between Trump and Congress as pressure to curtail Saudi arms deals and the U.S. role in Yemen builds from human rights groups and some conservatives. The Charles Koch Institute, a nonprofit group founded by the billionaire libertarian industrialist, has been warning a bipartisan group of lawmakers about the consequences of continued U.S. involvement in Yemen, foundation officials said.
Sen. Todd Young, R-Ind. - who with Sen. Jeanne Shaheen, D-N.H., is challenging the State Department's decision in September to certify that Saudi Arabia and the UAE are trying to protect civilians from harm - said the rising civilian casualties in Yemen should take precedent over the industry's financial interests.
"Economic interests are important, but they are not the most important thing," Young said.
The Washington Post's Alice Crites, Christian Davenport, Karen DeYoung, Karoun Demirjian, Aaron Gregg and Sean Sullivan contributed to this report.