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Brazil delays decision for jets deal
by Staff Writers
Sao Paulo (UPI) Oct 8, 2010

Brazil hopes China will okay bigger Embraer planes
Brasilia (AFP) Oct 8, 2010 - Brazil remains hopeful that Beijing will give aeronautics firm Embraer the nod to build bigger passenger planes in China, the office of President Luiz Inacio Lula da Silva said Friday. Embraer currently makes a 50-seat commercial jet in China with Aviation Industries of China (AVIC), and wants to build a 120-seat model but has not been able to get a permit from the government. Lula has sent Chinese authorities two letters, one at the end of 2009 and the other in May of this year, pressing for the permits, an official in his office told AFP. "The response was that it's still being analyzed," the official said.

Embraer's executive vice president, Paulo Souza y Silva, was quoted in O Estado de Sao Paulo Friday as saying that the Chinese wanted to build their own larger passenger planes and saw the Brazilians as competitors. The company issued a curt statement saying there was "no decision so far" to close the factory in China -- a worst case scenario mentioned by the newspaper -- and that it remained in negotiations with the Chinese government and its associates "with a view to continuing operations." Embraer is the world's number three maker of commercial aircraft, after US giant Boeing and its European rival Airbus. The Brazilian company racked up 7.9 billion dollars in contracts in July at the Farnborough International Air Show in Britain.

Adding to a prolonged delay, Brazil says it will wait until the end of the month, when presidential elections will have been completed, to decide on a multibillion-dollar purchase of new combat jets.

Brazil's revised stand on the tender sounded from Defense Minister Nelson Jobim who told defense contractors and military officials in Sao Paulo that outgoing President Luiz Inacio Lula da Silva must discuss the issue with his successor.

The run off to succeed Lula is slated for Oct. 31.

"When the second round is over we are going to examine the issue of the FX," Jobim said, referring to the code of the tender to supply Brazil's air force with 36 modern fighters, Expatica France reported. "The execution of the FX will be in under the new government, and so the president needs to speak with the new president-elect about the FX."

The foreign aerospace giants competing for the sale to Brazil of 36 combat aircraft are France's Dassault with its Rafale fighter, Sweden's Saab with the Gripen NG aircraft and U.S. company Boeing with the F/A-18 Super Hornet. Experts have suggested that the initial tender for 36 planes could rise to more than 120.

The deal is estimated to be worth $4 billion-$7 billion, depending on details of the order to be agreed, defense experts have said.

The aircraft are expected to renew Brazil's aging fleet of combat aircraft. It has long been suggested that France's Rafale fighter stands as the preferred pick of the Latin American country.

French hopes, though, appear to have been dashed as Brazil's electoral calendar has taken over. The military, also, has made clear through press leaks that it prefers the less-expensive Gripen.

All the contenders have met technical specifications and relevant reports have been delivered to Brazil's defense ministry.

What makes the French bid attractive, experts say, is France's sweetener of transferring technology related to the supersonic Rafale so that Brazil, bent on becoming the lead military power in South America, could assemble most of the jets itself and sell them regionally.

Brazil has already signed a deal with the French for the construction of five submarines in Brazil. The deal also includes building a nuclear-powered vessel.

Aspiring to become Latin America's pre-eminent military power, Brazil also signed a new strategic cooperation with Britain recently, adding to a pile of similar deals with other European countries and the United States.

The signing with Britain, however, paves the way for the potential purchase of 11 British warships to replace the country's aging navy fleet.

"Brazil's aim," wrote Petroleum World, "is not only to renovate its armed forces, which have long been getting by with outdated materiel but to defend increasingly valuable natural resources and to put muscle behind an expansive foreign policy which has seen Brasilia take on an important role in the region and beyond."

Lula's chosen successor and former Cabinet chief, Dilma Rousseff is said to be leading the presidential race against Jose Serra, the former governor of Sao Paulo state.


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