UPDATE 2-U.S. arms makers express concern to Trump admin over Saudi deals

Major U.S. defence contractors have expressed concern to the Trump administration that lawmakers angered by the disappearance of a Saudi journalist in Turkey will block further arms deals with Saudi Arabia, a senior U.S. official told Reuters on Friday.

Turkish reports that Saudi journalist Jamal Khashoggi, a vocal critic of Riyadh, was killed at the Saudi consulate in Istanbul have hardened resistance in the U.S. Congress to selling weapons to Saudi Arabia, already a sore point for many lawmakers concerned about the Saudi role in Yemen's civil war.

U.S. President Donald Trump said on Thursday he was wary of halting arms sales to Saudi Arabia over the case as the key U.S. ally would just shift its weapons purchases to Russia and China.

In Congress, Democrats and some of Trump's fellow Republicans, have said the Khashoggi case had heightened resistance to moving ahead with Saudi weapons sales that could be worth tens of billions of dollars.

Even before that, Democratic U.S. lawmakers had placed "holds" on at least four military equipment deals, largely because of Saudi attacks that killed Yemeni civilians.

"They've had holds on major systems for months for Yemen issues," the senior administration official said, speaking on condition of anonymity. "This makes it more likely they'll expand holds to include systems that aren't necessarily controversial by themselves. It's a major concern."

The U.S. official declined to name the companies that had contacted the administration over their Saudi deals. Defence contractors did not immediately respond to a request for comment.

Lockheed Martin Corp and Raytheon Co have been the most active U.S. defence companies with potential sales to Saudi Arabia since Trump announced a $110 billion package of arms deals with the country last year as part of his "Buy American" agenda to create jobs at home.

Since then, about $19 billion in deals have been officially notified to Congress, according to government records, making it unlikely that they can be halted. These include training packages for Saudi troops and pilots as well as the THAAD anti-missile system that could cost as much as $15 billion.

CONTRACTORS RATTLED

One lobbyist for a defence company who spoke on condition of anonymity said worries about a potential across-the-board blockage of Saudi sales by Congress had surfaced in recent days, a development that would hurt a range of contractors.

Senator Bob Corker, the Republican Foreign Relations Committee chairman, told reporters on Thursday he recently told a defence contractor not to push for a deal with the Saudis, even before the Khashoggi case.

"I shared with him before this happened, please do not push to have any arms sales brought up right now because they will not pass. It will not happen. With this, I can assure it won't happen for a while," Corker said.

While details of all the previously blocked Saudi deals were not immediately available, one was the planned sale of hundreds of millions of dollars worth of high-tech munitions to Saudi Arabia and the United Arab Emirates.

Senator Robert Menendez, the top Foreign Relations Committee Democrat, said the Trump administration had not satisfied concerns he first raised in June about the sale to members of the Saudi-led coalition of Raytheon's precision-guided munitions or PGMs.

A second U.S. official, speaking on condition of anonymity, said there were also currently holds in place on training sales for the Saudi government.

An informal U.S. review process lets the top Republicans and Democrats on the Senate Foreign Relations and House Foreign Affairs Committees stall major foreign arms deals if they have concerns such as whether weapons would be used to kill civilians.

Khashoggi, a U.S. resident who wrote columns for the Washington Post, entered the Saudi consulate in Istanbul on Oct. 2 to get documents for his forthcoming marriage. Saudi officials say he left shortly afterwards but Turkish officials and his fiancee, who was waiting outside, said he never came out.

Turkish sources have told Reuters the initial assessment of the police was that Khashoggi, an outspoken critic of the Saudi government, was deliberately killed inside the consulate. Riyadh has dismissed the allegations as baseless.