Cablegate: Brazil Fighter Competition: Under Secretaries,

DE RUEHBR #1094/01 2431959
R 311959Z AUG 09




E.O. 12958: DECL: 08/15/2019


Classified By: Charge d'Affaires Lisa Kubiske. Reason: 1.4(d)

1. (C) SUMMARY. At the same time that National Security
Advisor Jones highlighted the importance of U.S.-Brazil
partnership (reported septel), Under Secretary of State for
International Security and Arms Control Ellen Tauscher and
Under Secretary of Defense for Acquisition, Technology and
Logistics Ashton Carter held extensive meetings August 4-6
with Brazilian leadership, including the ministers of Defense
and External Relations, the President's Foreign Policy
Advisor, and the Air Force commander, in support of the U.S.
bid to provide Brazil,s next generation fighter aircraft.
U/S Tauscher provided a letter from Secretary Clinton to her
Brazilian counterparts assuring them of State Department
support. As noted in ref a and other cables, Brazil has long
been concerned about U.S. willingness to transfer technology.
The visit of the two USG officials responsible for technology
release came at an opportune time as the GOB prepares for a
final decision. As a result, Brazilian Air Force Chief Saito
announced that the decision would be delayed into
mid-September, a key date as French President Sarkozy plans
to visit Brazil September 7, when conventional wisdom
expected a decision in favor of the French aircraft as a
deliverable. While the Under Secretaries, visit has
increased momentum in favor of the Boeing Super Hornet, there
is still considerable political support for the French, and a
major lobbying effort associated with the Sarkozy visit is
expected. Getting the F18 across the finish line will
require continued USG efforts. Post recommends additional
high level approaches to key Brazilian decision makers --
including President Lula -- and preparing a public affairs
strategy to counter possible misinformation as the decision
approaches. END SUMMARY.

2. (C) According to Brazilian contacts, the July 9
discussion between Presidents Obama and Lula on Brazil,s
fighter purchase energized the U.S. bid. While Brazil had
previously been skeptical about U.S. support for transfer of
technology, the President,s assurance opened the door for
the USG to make its case. While NSA Jones provided much of
the big picture vision of a U.S.-Brazil partnership, Under
Secretaries Tauscher and Carter took on the task of making
the case for Boeing,s bid. U/S Tauscher,s role was vital
as it was the first time that Brazilian officials who will be
making the decision of which plane to buy heard from a senior
State Department official that the USG had approved the
necessary transfer of technology (see ref b for discussion of
Brazil doubts about State).

3. (C) In their meetings with Brazilian leaders, Tauscher
and Carter,s message was consistent: the U.S. is interested
in a partnership with Brazil. The fighter sale is only one
aspect of this, although greater interoperability resulting
from the use of U.S. fighters will advance cooperation.
Tauscher made the point that the United States prizes its
relationship with Brazil, as evidenced by the unprecedented
nature of some of the decisions in relation to the Super
Hornet, in particular the authorization to integrate
Brazilian manufactured weapons. As the official ultimately
responsible for export controls, Tauscher said that future
decisions regarding Brazil would receive careful
consideration in terms of how to help a friendly government.
Regarding the U.S. decision to deny retransfer of USML
controlled parts of Brazilian Super Tucano aircraft to
Venezuela, she pointed out that the decision had been made by
the previous administration to deny aircraft to Venezuela,
but without consideration of its effect on Brazil. She
stated that future decisions regarding Brazil would take
Brazil,s interests more into account and would include
consultations with the GOB as appropriate. Tauscher noted
that national security and economic security are inseparable
and a deal between Boeing and Brazil would not only improve
Brazil,s security but would entail important economic
benefits. The Super Hornet, she said, is the best multi-role
fighter in the world and meets or exceeds Brazil,s
requirements while providing a sound basis for the key
U.S.-Brazil partnership.

4. (C) USD/ATL Carter highlighted the growing closeness of

BRASILIA 00001094 002 OF 003

the U.S. and Brazilian defense industries. As industry
becomes more interdependent, such partnerships bring added
benefits to all sides. Noting that Brazil,s defense
strategy (ref c) linked defense modernization to national
development, Carter said that partnership with the U.S. would
help Brazil achieve its strategic goals. Carter told the
Brazilians that he had chaired the committee making key tech
release decisions. Because Brazil was a friendly country,
with a well-developed aviation sector and a good record of
technology security, there was no reason not to approve
transfers to Brazil. Boeing was offering a large workshare
in the project that would create an opportunity for Brazil to
participate in ongoing F18 development, sustaining jobs for
Brazilian industry over the life cycle of the aircraft.
Finally, Carter noted that tech transfers to Brazil would
grow easier with time and experience.

5. (C) Defense Minister Jobim said that the information
provided by the Tauscher/Carter team was important and
merited careful review while repeating his view (see ref a)
that tech transfer would be the key for a Brazilian decision.
Jobim told Tauscher privately that he believed Boeing should
have &first refusal8 on the sale and that he viewed the
U.S. as Brazil,s &main partner.8 He also cautioned that
the final decision would be made by President Lula and that
he did not know what Lula,s position would be, a point he
underlined in an August 7 conversation with Ambassador Sobel.

6. (C) Air Force Chief Saito called the high-level
assurances on tech transfer &music to my ears.8 His
objective in the competition is to position the Brazilian Air
Force (and Brazil aviation industry) for a &technological
leap.8 Saito praised President Obama,s efforts with
President Lula to provide assurance of USG support. He also
laid down a marker that Brazil expected that a significant
amount of the work of integrating Brazilian weapons on the
FX2 would be done in Brazil, a requirement that will create
practical difficulties for any manufacturer. EMBASSY
COMMENT: Saito is a former fighter pilot, and it is
increasingly clear that he will favor the most capable
aircraft -- the Super Hornet. END COMMENT.

7. (C) During the meeting with Foreign Minister Celso
Amorim, U/S Tauscher hand-delivered a letter from the
Secretary assuring that State had approved all necessary
technology transfer in furtherance of the propoased sale. In
response to Amorim,s concern about the &ban8 on Brazilian
re-sale of Super Tucanos, she assured him that there was no
ban, that the previous administration had made a &gaffe8 in
not considering Brazil,s interests when denying the sale to
Venezuela, and that in the future such decisions would be
made on a case-by-case basis with an eye toward its
significance to our growing bilateral partnership. U/S
Tauscher also met with Embraer President Frederico Currado
and briefed him about the Secretary,s letter and the USG
commitment to meeting all Brazilian tech transfer
requirements. Currado was clear that he believed a
partnership with Boeing was in Embraer,s interests and would
carry significant long-term benefits for the company.
Brazilian Senator Heraclito Fortes, a supporter of Boeing,s
bid and the second in the Senate leadership, also believed
that USG assurances of tech transfers would be important but
refused to speculate on Boeing,s chances for the final
decision, noting that there was little confidence in the
United States among President Lula,s advisors.

8. (SBU) U/S Tauscher,s visit received strongly positive
coverage in the Brazilian media. A feature story in Estado
Sao Paulo August 6 highlighted the importance of the
U.S.-Brazil partnership and the Secretary,s assurances on
tech transfer. These points were picked up by a number of
other news outlets, although the coverage was somewhat
eclipsed by reporting on the supposed U.S. bases in Columbia.
There remains strong interest from the media in seeing the
text of the Secretary,s letter. At the same time, we are
seeing the beginnings of a counter attack from Boeing,s
competitors in the press on two fronts: first that the Super
Hornet, although highly capable, would be too expensive, and
second that, because the F18 is currently operational, its
technology is &frozen,8 not leaving Brazil an opportunity
to participate in technological development.

BRASILIA 00001094 003 OF 003

9. (C) The combination of the President,s intervention
with Lula, the Secretary,s letter and the visit of Under
Secretaries Tauscher and Carter has created a strong momentum
in favor of the Super Hornet. As noted by MOD Jobim,
however, the final decision will be political and will be
made by President Lula, probably in September. With a
Swedish lobbying team subsequently visiting and the early
September Sarkozy visit on the horizon, further USG efforts
will be needed for a successful conclusion. Post recommends
continued high-level approaches to Saito, Jobim and Lula to
underline the Tauscher/Carter message on the importance of
our partnership and the mutual benefits of a fighter sale.
This message could be reinforced from the White House as
appropriate. We should also be prepared to see our
commitment to tech transfer questioned. Folha de Sao Paulo
has already printed an op-ed (probably inspired by the MRE)
suggesting that despite the Secretary,s letter, the State
Department may block technology transfer. On August 12,
Valor Economico quoted the text of the Secretary,s letter
and its categorical support for the transfer. Despite this
helpful development, the USG will need to be able to respond
to doubts as to the Secretary's sincerity. Post will also
continue to brief Brazilian leaders as appropriate on the USG
approval of technology transfer. Boeing leaders reinforced
this message during their August 12-13 visit to Brasilia.

10. (U) Under Secretaries Tauscher and Carter have cleared
this message.


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