BRASILIA: US hopes of landing a coveted deal worth more than $4bn to sell 36 fighter jets to Brazil have suffered a setback with recent revelations that the US collected data on Brazilian Internet communications.
When US Secretary of State John Kerry sits down with Brazilian officials in Brasilia to prepare a state visit to the White House by President Dilma Rousseff, the sale of the warplanes will not be on the agenda, a Brazilian source said.
“We cannot talk about the fighters now ... . You cannot give such a contract to a country that you do not trust,” a high-level Brazilian government official told Reuters on condition of anonymity because of the sensitivity of the matter.
The official said Kerry’s one-day visit to Brazil will focus on restoring the trust between Washington and Brasilia that was shaken by the spying disclosures, which set off a political uproar in the largest US trade partner in South America.
Last month, Brazilian newspaper O Globo published documents leaked by fugitive former National Security Agency contractor Edward Snowden that revealed US surveillance of Internet communications in Brazil and other Latin American countries.
Angry Brazilian senators questioned Rousseff’s planned visit to Washington in October and opposed awarding the US the multibillion-dollar deal to overhaul the Brazilian Air Force’s fleet of fighter jets.
Boeing Co is competing with its F/A-18 Super Hornet against France’s Rafale made by Dassault Aviation and Sweden’s Gripen made by Saab to win a contract worth at least $4bn, with probable follow-up orders that would greatly increase the value of the contract over time.
That makes it a critical prize for defence companies at a moment when the US and many European countries are tightening military budgets.
A senior US official said Brazil’s final decision should be based on which is the superior aircraft.
“We think we have the best product,” he said of the F/A-18, adding that the US has promised to transfer as much technology to Brazil as allowed under US law regarding the fighter jet.
A Boeing spokeswoman declined to comment on the current state of play of its bid but said the Brazilian contract was a good business opportunity for the US aircraft manufacturer.
Brazil has been debating the replacement of its ageing fighter jets for more than a decade, spanning three presidents. Rousseff appeared to be close to a decision earlier this year, with Boeing the clear favourite after the US Air Force bought 20 light attack planes from Brazilian plane maker Embraer for use in Afghanistan.
Rousseff put off a decision on the fighter jets due to Brazil’s economic slowdown and a deteriorating fiscal situation. The defence budget was slashed by 3.7bn reais ($1.62bn) in May and another 920m reais last month.
The massive street protests that shook Brazil in June, fuelled by widespread frustration with poor public services and corruption, put the spotlight on government spending and all but ruled out a big-ticket item such as the fighter jets.
“I don’t expect the president to decide on the fighter contract this year, and next year is an election year so it might have to wait until 2015,” said another government official involved in defence procurement policy.
The defence ministry, however, still hopes Rousseff will sign off on the new fighter jets before the end of this year.
The Brazilian Air Force has put pressure on the government to take a decision by announcing publicly that its French-made Mirage 2000s, which defend the Brazilian capital, will be obsolete and grounded on the last day of this year.
The Internet surveillance scandal set off by whistleblower Snowden has roiled relations between the two countries just as they seemed to be on a upward spiral under Rousseff, a pragmatic leftist. Reuters
