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Cablegate: Brazil's Next Generation Fighter Competition Takes

VZCZCXYZ0000
RR RUEHWEB

DE RUEHBR #1061/01 2181457
ZNY CCCCC ZZH
R 051457Z AUG 08
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC 2221
INFO RUEHMO/AMEMBASSY MOSCOW 0381
RUEHFR/AMEMBASSY PARIS 0440
RUEHSM/AMEMBASSY STOCKHOLM 0069
RUEHRI/AMCONSUL RIO DE JANEIRO 6474
RUEHSO/AMCONSUL SAO PAULO 2563
RUEKJCS/JOINT STAFF WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEKJCS/SECDEF WASHDC
RHMFISS/CDR USSOUTHCOM MIAMI FL
RUEAHQA/HQ USAF WASHINGTON DC//SAF/IA//
RUENAAA/NAVY IPO WASHINGTON DC

C O N F I D E N T I A L BRASILIA 001061

SIPDIS

STATE FOR WHA, PM/RSAT, USDOC FOR
MAC/ADRISCOLL/LFUSSELL/MCAMERON, FCS/PWILLIAMS

E.O. 12958: DECL: 08/01/2018
TAGS: PREL MARR BR ETTC
SUBJECT: BRAZIL'S NEXT GENERATION FIGHTER COMPETITION TAKES
OFF

REF: BRASILIA 847

Classified By: DCM Lisa Kubiske. Reason: 1.5(d)

1. (C) SUMMARY. Meeting the July 31, deadline for
responses to Brazil's request for information (RFI) on a next
generation fighter aircraft (FX2), Boeing and Lockheed Martin
submitted their proposals on July 30 and 31 respectively.
The Brazilian Air Force (BRAF) is expected to review the
proposals of the six competing aircraft and announce a short
list by the end of August. As noted in reftel, benefits to
the Brazilian economy, particularly its aerospace industry
will be decisive in the fighter competition. Both U.S.
companies have included substantial packages for industrial
cooperation but are taking widely different approaches. Both
expect strong competition from the French, Russian and
Swedish competitors and will seek appropriate USG advocacy.
Post strongly supports providing advocacy for US competitors
once approved by Washington agencies. END SUMMARY.

2. (C) BOEING. Boeing provided information on its F18
Super Hornet, highlighting the aircraft's performance record
and potential for upgrades to keep it among the world's
leading combat aircraft for the next several decades.
Boeing's proposal included an extensive section on the
technology transfer potential and on possibilities for
industrial cooperation. While Boeing could not be specific
on the cooperative activities it would pursue, it did provide
a list of potential Brazilian partners and of possible
projects in which they could participate. It also provided
examples of how other F18 users contribute to the production
of their aircraft. Most importantly, Boeing offers opening
for broad cooperation with Embraer, not only on military, but
on civilian aircraft as well. As Embraer specializes in
regional jets that Boeing does not produce, such a
partnership would allow both companies to utilize their
respective strengths. As BRAF officials have indicated in
the past that benefits to Embraer will be key, Boeing's offer
should be attractive. (Note: Embraer is a private sector
company, but the only Brazilian aircraft manufacturer and
considered a national asset.) After an initial review of the
Boeing submission, the BRAF team overseeing the process told
the Boeing rep that the submission was "just what we were
looking for."

3. (C) LOCKHEED. Lockheed Martin faces a more difficult
road with its F16. In Brazil's aborted FX1 competition, the
F16 was deemed not to meet Brazil's requirements, and many
Brazilian Air Force officers believe it is too old an
aircraft to compete with the other candidates. Lockheed is
offering a newer, more capable F16, but the real appeal of
the plane will be that it would establish a relationship with
Lockheed that would carry over to eventual purchase of the
F35 Joint Strike Fighter. Many Brazilian pilots have said
openly that the F35 would be their preferred long term
aircraft, but its availability would be after Brazil must
replace its aging fleet. The F16 would provide a capable
option until the F35 could be available. Lockheed's offer
will also be attractive to Brazil because it would lead to
construction of a manufacturing and/or assembly facility for
the F16 in Brazil, delivering a direct economic benefit over
the life of the aircraft in Brazilian service. The BRAF team
called the Lockheed proposal "impressive," but noted that
because it was a late addition to the competition, they are
least familiar with the F16. This could prove a disadvantage
among the top level staff who will make final decisions. On
the other hand, Lockheed's offers of co-production were
well-received as was the potential for Brazil to become a
regional service hub for other South American countries
operating smaller numbers of F16s.

4. (C) OTHER COMPETITORS. Post does not have the details
of the proposals of the other competitors, the Russian SU35,
the Swedish Gripen and the French Rafale. Brazilian contacts
have indicated that the French and Russians have both been
active in lobbying for their planes in advance of their
formal submissions. BRAF sources have told embassy officers
that they would not prefer the Russian plane as they believe

it has reliability problems and because the Russians are
perceived as suppliers of last resort. Lockheed reps have
said that they expect a strong proposal from Saab, to include
a substantial offset package, based on the Swedish company's
past activity.

5. (C) COMMENT. The two U.S. proposals could both provide
Brazil with capable aircraft and strong economic benefits. In
effect, they offer Brazil a choice between the shorter term
advantages of indigenous production of an aircraft with a
limited shelflife and a potential long term relationship that
would go well beyond the FX2 program. As noted in reftel,
how Brazil views the economic advantages will be key in its
decision making. U.S. competitors will also have to overcome
a presumption that U.S. technology transfer policies are too
restrictive and have indicated that they will request USG
assistance in this regard. Providing Defense Minister Jobim
with familiarization flights on both aircraft during his
recent visit to the U.S. and with briefings on tech transfers
has been a step in the right direction. With a relatively
short period in which to make submission, competitors have
put together impressive proposals. It is likely that the
BRAF has compressed the normal process for RFIs in order to
have its "short list" of aircraft together before the
Minister for Planning unrolls the new national defense
strategy on September 7 out of concern that the planning
document will limit its options in selecting new fighters.
SOBEL

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