Madrid said Friday it was working “to defend” a lucrative warship contract with Saudi Arabia amid reports the deal is in trouble after the Socialist government blocked the sale of 400 bombs to Riyadh, which is involved in the bloody Yemen conflict.

Spain’s defence ministry said Tuesday it intended to cancel a 2015 deal to sell the laser-guided bombs to Saudi Arabia, which is leading a coalition fighting rebels in Yemen, where nearly 10,000 have been killed.

The ministry said it planned to return the 9.2 million euros (10.6 million) already paid by the Saudis for the arms under a deal signed by the previous conservative government.

A report in online daily El Independiente said that Riyadh now planned to cancel a 1.8-billion-euro contract with Spain to build five Corvette warships.

This has created huge concern in shipyards of Spanish company Navantia in the southern region of Andalusia, where thousands of jobs are at stake.

“The government is working to maintain good relations with Saudi Arabia and to defend the contracts for the construction of five Corvettes in Navantia’s shipyards,” government spokeswoman Isabel Celaa told reporters.

“That implies maintaining the government’s international commitments,” she added, raising the question as to whether the government was considering reversing its decision to block the sale of the bombs.

“I don’t think there is a diplomatic crisis with Saudi Arabia,” Celaa said.











But she acknowledged “there may be an exchange of opinions and divergence which I think will be resolved.”

Spain’s deputy trade minister Xiana Mendez meanwhile told lawmakers in the parliament’s defence commission that the government was “aware of the importance of this… splendid contract worth 1.8 billion euros, with close to 6,000 jobs” involved.

“As far as I know, this contract is still in force.”

She called for “calm”, adding “the government will not endanger” the sale of these warships.

Saudi Arabia, the United Arab Emirates and other allies intervened in Yemen in March 2015 after Shiite Huthi rebels linked to Iran ousted the government from the capital Sanaa and seized swathes of the country.

Nearly 10,000 people have been killed in the conflict since then, 2,200 of them children, and sparked what the UN has described as the world’s worst humanitarian crisis.

Amnesty International says Spain is one of the biggest arms exporters to Saudi Arabia.