Brazil Delays Fighter Buys

By LUCIANA MAGALHAES

09/08/2012

BRASILIA—Brazil’s defense minister said the economic slowdown has delayed the country’s long-awaited decision to purchase a new generation of fighter jets.

« The project is not being abandoned. There will be a decision in the right time. But, today, I would prefer not to give a date, » Defense Minister Celso Amorim said in an interview. « The economic situation has taken a less-favorable turn than expected and it naturally requires caution. »

The process, which has lasted more than a decade, involves three international contenders: the Gripen NG made by Saab AB of Sweden; the F/A-18 Super Hornet from Boeing Co. of the U.S.; and the Rafale warplane manufactured by Dassault Aviation SA of France.

Brazil’s government sent a letter to the three companies in June asking them to extend their jet proposals until December. According to the government, this is a common practice that typically happens every six months if a decision isn’t reached.

« I am not in conversations with any companies at the moment, which doesn’t exclude the possibility that I might receive somebody here, » Mr. Amorim said.

In 2010, Luiz Inácio Lula da Silva and Nicolas Sarkozy, then presidents of Brazil and France, respectively, issued a joint statement saying Brazil entered into exclusive negotiations involving the Rafales. But the Brazilian government backtracked not long after and said the competition was still wide open. In the end, Mr. da Silva left the decision to his successor, Dilma Rousseff.

« Today, I wouldn’t say any company is [the] favorite, » Mr. Amorim said. « The important question is when we will do it and, then, we will again look into the proposals. There’s a need to re-equip, but it needs to be resolved accordingly with the country’s possibilities. »

Brazil will base its decision on price, quality and access to a jet maker’s technology, but « the specific weight that will be given to each one of these is something that I haven’t had the chance to discuss profoundly, » Mr. Amorim said. « There is no decision, » he added.

The defense minister said a decision earlier this year by the U.S. government to cancel an order of Brazilian-made military training planes wouldn’t weigh against Boeing. In February, the U.S. Air Force canceled an order for Super Tucanos manufactured by Embraer SA of Brazil and reopened the contest, saying top procurement officials weren’t satisfied with the documentation in the bidding.

Donna Hrinak, Boeing’s president in Brazil, said the company is « prepared to wait for the decision of the Brazilian government. » Representatives for Saab and Dassault couldn’t be reached for comment Thursday.

Other defense programs in Brazil are moving ahead, meanwhile, including one to build a nuclear-powered submarine in a joint project with France. Brazil also has purchased 50 new helicopters made locally.

Mr. Amorim is keen to see Brazil invest more in defense.

The ministry’s budget is about 1.5% of gross domestic product, or about 61.76 billion reais ($30.54 billion) in 2011. Ten years ago, spending was far lower, at 25.5 billion reais, but accounted for about 2% of GDP. Mr. Amorim said he wants to return to those levels, which would bring Brazil closer in line with spending in countries such as China, Russia and India.

« This is my goal. It’s not an approved government program. It’s something I consider reasonable to be attained, » he said.

Brazil—which fought the Paraguayan War in the 1860s and was involved in the First and Second World Wars—hasn’t become embroiled in a war in decades. But Mr. Amorim said the country needs a defense system capable of protecting its vast natural resources, which include recent discoveries of huge oil reserves off the country’s southeastern coast. Moreover, water has become a significant asset, he said.

« Today, besides the energy, the oil, or the capacity of producing food, we have a resource that is likely the most sought-after in this 21st century, which is the fresh water, » he said.

The minister said defense spending also can be a powerful way to create and keep jobs during the continuing economic slowdown, and can provide incentives for technological advances.

Source: online.wsj.com (The Wall Street Journal)

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