WASHINGTON — America's top defense firms will face limited financial risks in their dealings with Saudi Arabia, even as lawmakers consider imposing limits on arms sales to the kingdom, according to analysts at Cowen Research.
"It would appear that these would be limited in duration and scope, and big-ticket buys of missile defense systems would not be impacted," the analysts wrote in the note.
Of the major defense suppliers, Lockheed Martin would have the most exposure, according to the note, but it would still amount to a relatively tiny portion of the company's business.
Saudi Arabia's oil-rich monarchy is one of America's most strategic partners and a significant patron of U.S. defense companies. The Saudis are the indisputable top buyers of U.S.-made arms, a title that has safeguarded the kingdom from retaliatory sanctions over the disappearance of journalist Jamal Khashoggi and the Saudi-led war in Yemen.
President Donald Trump has often cited the importance of the U.S. relationship with Saudi Arabia, repeatedly pushing back on approving significant economic or political consequences for Riyadh's actions. In an extraordinary statement last week, Trump affirmed that the U.S. would continue to stand with Saudi Arabia.
Trump has also commented on the potential impact to defense suppliers if the U.S. were to sanction the Saudis over the Khashoggi killing.
"I tell you what I don't want to do," Trump said to CBS' "60 Minutes" last month, when he was asked about possibly blocking arms sales to Riyadh. "Boeing, Lockheed, Raytheon, all these [companies]. I don't want to hurt jobs. I don't want to lose an order like that. There are other ways of punishing, to use a word that's a pretty harsh word, but it's true."
However, if Congress imposed short-term restrictions on Saudi weapons sales the resulting impact looks to be less than 2 percent of sales for Lockheed Martin, Raytheon, Boeing and General Dynamics, and negligible for Northrop Grumman.
Here's a breakdown of what top defense firms are selling to Saudi Arabia and which contracts are at risk.