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Cablegate: Brazil's Fighter Purchase: "Everything's Confused"

VZCZCXRO3290
PP RUEHRG
DE RUEHBR #1130 2541032
ZNY CCCCC ZZH
P 111032Z SEP 09
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC PRIORITY 5057
RUEKJCS/SECDEF WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
INFO RUEHFR/AMEMBASSY PARIS 0501
RUEHSM/AMEMBASSY STOCKHOLM 0085
RUEHRG/AMCONSUL RECIFE 9918
RUEHRI/AMCONSUL RIO DE JANEIRO 8179
RUEHSO/AMCONSUL SAO PAULO 4531
RUEKJCS/JOINT STAFF WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RHMFISS/CDR USSOUTHCOM MIAMI FL

C O N F I D E N T I A L BRASILIA 001130

SIPDIS

STATE FOR T, WHA AND PM. OSD FOR USDP AND USD/AT&L

E.O. 12958: DECL: 09/10/2019
TAGS: PREL MASC ETTC BR
SUBJECT: BRAZIL'S FIGHTER PURCHASE: "EVERYTHING'S CONFUSED"

REF: A. BRASILIA 1124
B. BRASILIA 1100

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

1. (C) The period following President Lula's surprise
September 7 announcement that he wanted to negotiate with
France for the purchase of Rafale aircraft has seen a
dizzying series of turnabouts, a remarkable variety of rumors
and little in the way of solid information. It is clear that
the GOB still considers the competition to be in progress and
will proceed with its technical evaluation process. MOD
Jobim has stated definitively that all three competitors will
be considered. Lula's announcement is widely viewed as
premature and something of a gaffe, and it has led to
widespread questioning in the press and Congress as to why
Brazil would choose the most expensive option. Further
muddying the waters was the fortuitously-timed USG
announcement that the Congressional notification period for
the U.S. competitor, the Boeing Super Hornet, had expired and
that Brazil could now consider the USG/Boeing offer approved.
Brazilian Air Force contacts have reassured Embassy military
reps that they will complete their evaluation and that it
would be favorable for the USG. They caution, however, that
Monday's events show clearly that the final decision will be
a political one and high-level political engagement will be
necessary for success.

2. (C) Most daily papers carried the news that we are still
in the competition and that we consider the USG offer to be
superior. We heard from a member of the Senate staff that
the news of the expiration of the Congressional notification
was more important than Secretary Clinton's letter because
the GOB had been most concerned about the U.S. Congress
blocking the sale. Presidential Advisor Marco Aurelio
Gercia, a known proponent of a French alliance, tried to
downplay USG credibility by saying the "precedents" of
dealing with the USG "are not good" without specifying any
such precedent. With the French offer to buy ten of the
to-be-developed Brazilian cargo aircraft seen as decisive in
getting Lula to support buying French fighters, the news has
broken that Embraer has already bid on, and stands a good
chance of winning, a tender to supply the U.S. Air Force with
100 light attack aircraft, a far more tangible and immediate
benefit to Brazilian industry.

3. (C) COMMENT. While it remains difficult to divine what
chance there may be to overcome President Lula's premature
declaration in favor of the French, the opportunity is there.
The French bid is now widely seen as too expensive and
possibly linked to corruption. As noted in ref a, Lula's
statement that the French enjoyed an advantage in technology
transfer has now been called into question, creating an
opening to make a case for Boeing's advantages of price,
offsets and performance. Boeing will meet with Brazilian
suppliers September 15-16 to build support in the Brazilian
business community for partnership. The fact remains,
however, that President Lula has established himself as the
decision maker, and chances for USG success depend on
engaging with Lula.
KUBISKE

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