Viewing cable 10BRASILIA3, FX2 at the End of 2009
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| Reference ID | Created | Released | Classification | Origin |
|---|---|---|---|---|
| 10BRASILIA3 | 2010-01-05 19:07 | 2010-12-05 12:12 | CONFIDENTIAL | Embassy Brasilia |
VZCZCXYZ0001 RR RUEHWEB DE RUEHBR #0003/01 0051940 ZNY CCCCC ZZH R 051940Z JAN 10 FM AMEMBASSY BRASILIA TO RUEHC/SECSTATE WASHDC 0263 RUEKJCS/SECDEF WASHINGTON DC INFO RHEHNSC/WHITE HOUSE NATIONAL SECURITY COUNCIL WASHINGTON DC RHMFISS/CDR USSOUTHCOM MIAMI FL RUEHBR/AMEMBASSY BRASILIA RUEHFR/AMEMBASSY PARIS 0001 RUEHRI/AMCONSUL RIO DE JANEIRO RUEHSM/AMEMBASSY STOCKHOLM 0001 RUEHSO/AMCONSUL SAO PAULO
C O N F I D E N T I A L BRASILIA 000003 SIPDIS STATE FOR T, PM AND WHA E.O. 12958: DECL: 2020/01/05 TAGS: PREL ETTC MASS BR SUBJECT: FX2 at the End of 2009 REF: BRASILIA 1124; IIR 6 809 0156 10 CLASSIFIED BY: Lisa Kubiske, Charge d'Affaires a.i.; REASON: 1.4(D) ¶1. (C) As 2009 comes to end, Brazil's FX2 competition remains
undecided. It had been expected that President Lula would make a
decision before the end of the year, so as to be able to complete
the sale during his tenure. Practically speaking, however, even
if a Presidential decision were to be made immediately, the time
needed for contract negotiation and appropriation of funds means
that the final decision to buy the planes will fall to the next
President in 2011. Embassy contacts in the Ministry of External
Relations and Ministry of Defense believe that Defense Minister
Jobim will meet with Lula later in January to try to make a decision. SEPTEMBER: RAFALE PREFERRED ¶2. (C) Lula has made no secret of his preference for the Dassault Rafale,
announcing during President Sarkozy's September 7 visit (ref a) that
he planned to negotiate the purchase with France, before even reading
the Brazilian Air Force's (BRAF) technical evaluation. During the
following three months, it was clear that Lula had instructed his
government, including Jobim, to focus on making the deal with France
work. In September, Lula told the Brazilian press that negotiations
with France would focus on attaining a price for the aircraft similar
to what Boeing and Saab were asking. (Reportedly, Dassault's best
offer was 40% higher.) Despite another Sarkozy visit to Brazil in
November and Jobim's later stop in Paris, the French were not able
to meet Brazilian requests for a lower price, but their lack of
responsiveness (ref b) did not seem to affect the Brazilian preference.
Initial statements in September from Lula and FM Amorim attempted to
portray the French as somehow offering a superior level of technology
transfer as justification for the higher price, but as details emerged
from the technical evaluation process, it became clear that all three
competitors were generally meeting BRAF tech transfer requirements. DECEMBER: NEW MOD INTEREST IN BOEING, SAAB STILL A CONTENDER ¶3. (C) During October and November, contacts by Embassy officials
and Boeing representatives were received politely, but with little real
interest as the focus remained on the French. In recent weeks, however,
there has been a notable change from the Minister of Defense.
Beginning with A/S Valenzuela's December 14 meeting with Jobim
(reported septel), there has been renewed interest in the
USG/Boeing proposal. While Jobim repeated concerns about "bad
precedents" for policies regarding transfer of U.S.-origin
technology (in reality complaints about export licensing procedures),
he said he understood that the USG had a new approach and was
interested in Boeing's industrial cooperation offer. Boeing has
strengthened its case by promoting its new "Global Super Hornet"
initiative, which would transfer important elements of production
of all F/A 18 aircraft (including those for the U.S. military) to
Brazil. By globalizing Super Hornet production and including
Brazil in the process, Boeing not only is in position to create
and maintain more jobs in Brazil, but can assuage Brazilian
paranoia about theoretical USG cutoffs of fighter supply by
pointing out that any such cutoff would affect the U.S. Navy
as well. In a recent interview with the newspaper Folha de Sao
Paulo, Jobim was careful not to commit, mentioning the "strategic
alliance" with France but also noting that cost, technology
transfer and overall aircraft capability were important. ¶4. (C) Along with the revival of Boeing's hopes, the Swedish
Gripen remains a strong competitor. As noted in ref b, many
Brazilians perceive it to be an attractive alternative to the
Rafale because it has the lowest sticker price. Saab's plan to
co-develop the new generation Gripen with Brazil has also garnered
support in Brazil's aviation industry among those who believe
that such development will increase local aircraft design
capabilities. Jobim, however, has been openly dismissive of
the Swedes on the basis of the Gripen's lesser capability
and because the "New Generation" variant offered to Brazil does
not yet exist. A recent story in Isto C) magazine with sourcing
to the BRAF pointed out that military aircraft development
programs normally run over deadlines and budgets, negating the
Gripen's purported price advantage. ¶5. (C) COMMENT. While the Rafale's high price and doubts about
the Gripen's development would seem to make the Super Hornet the
obvious choice, the fact remains that Lula is reluctant to buy
an American aircraft. It is possible that the renewed interest
in the USG offer is merely a ploy to gain leverage on the French
or that the delay in the decision is intended to allow Dassault
to find a way to lower its price. In Mission's view, the chance
to win the FX2 competition is real. We know that the Super Hornet
received the most favorable technical evaluation from the BRAF and
is the choice of the operators. We have also been successful in
answering most of the doubts raised about USG technology transfer
policies, particularly with the technical evaluation team. There
remains, however, the formidable obstacle of convincing Lula.
Our goal now should be to make sure that Jobim has as strong a
case as possible to take to Lula in January. Mission recommends
the following steps: B7 Continue to underline full USG support in
all high-level contacts with Brazil. As Mission has pointed out
previously, repeated assurances from President Obama to Lula in
the course of their normal contacts are the single most effective
means of making our case. B7 Use Ambassador-Designate Shannon's
initial contacts with the Brazilian leadership to make the point
that we have worked hard to ensure we have the best offer.
B7 Maintain our public affairs campaign to highlight that not
only has the USG completed its approval of tech transfer, but
Boeing is confident enough in the offer to be prepared to shift
part of production (including hundreds of jobs) to Brazil.
B7 Coordinate with Boeing to ensure the advantages of the Global
Super Hornet program are made known to the Brazilian Congress and media.
KUBISKE
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