Aitken row provokes Saudi anger

British arms contracts with Gulf states may be at risk

Publicity over the business dealings of Jonathan Aitken has started to cause unease among Britain's allies and trade customers in the Gulf and could affect British efforts to win defence contracts.

British newspapers, including the Independent, have this week been banned from circulating in the United Arab Emirates, where the government is soon to decide whether to lease British Tornado aircraft. And diplomatic sources say the Saudi government, committed to the controversial £20bn al-Ya-mamah British arms contracts, has made high-level protests about negative publicity over Mr Aitken's business links with Saudi royal family members.

The Saudi ambassador in London, Dr Ghazi Algosaibi, is expected formally to convey Riyadh's displeasure. It is understood senior princes feel the Aitken affair has become an embarrassment, particularly because details are being avidly spread via fax by Islamic dissidents in London. "Some people are in a state of apoplexy", a source in the kingdom said.

All foreign newspapers entering Saudi Arabia are censored and editions containing news about Mr Aitken have had those sections cut or blacked out before going on sale.

Last Monday's World in Action programme about Mr Aitken contained an interview taped in London with the most prominent Saudi dissident abroad, the militant fundamentalist Mohammed al-Masari.

His followers subsequently made great play of allegations involving rich Saudi princes, high living and large profits from arms deals. They intend to circulate news and faxes from Britain when worshippers gather at mosques throughout the kingdom for Friday prayers this morning. Some 30,000 Britons work in Saudi Arabia and British exports last year were worth £1.5bn.

In the neighbouring United Arab Emirates, the authorities appeared concerned both about the reporting of Mr Aitken's Saudi dealings and about the slightly farcical story of an autographed picture of Baroness Thatcher, addressed to the UAE's ruler, Sheikh Zayed, for delivery by Mark Thatcher.

The Emirates are at present the scene of a tough contest to win an order for 80 new warplanes, pitting Sukhoi of Russia against Dassault of France and Lockheed Martin and McDonnell Douglas of the US.

The four-nation Eurofighter consortium is also in the race, with a bid to convince the country to lease British Tornados until the Eurofighter is ready for export early in the next century.

The Aitken and Thatcher stories, added to the London activities of Arab exiles, have left ministers obliged to explain to senior Saudis that the Government cannot control the media or prevent exiles using the right to free speech in Britain, provided they stay within the law.

The stakes were raised this week when an Arabic newspaper published in London carried a statement from a hitherto unknown fundamentalist group threatening to attack British and American forces in the Gulf unless they quit the region by 28 June - the end of the Muslim month of Muharram.

The paper, Al-Quds Al-Arabi, is funded by elements hostile to the Saudi royal family. It printed a communiqu from the "Islamic Peninsula Movement for Change - Jihad wing" saying that foreign troops would become "legitimate targets" because they protected the House of Saud and other ruling dynasties. The statement was rebroadcast by Iraq's state-controlled Baghdad radio.

The whole cycle of allegations, reporting and political exploitation by dissidents has become a test case for sensitive governments, who are no longer able to seal borders and airwaves against the flow of information.