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| (C) Gripen |
$4.5 billion contract to Saab AB to
replace its aging fleet of fighter jets, a surprise coup for the Swedish
company after news of U.S. spying on Brazilians helped derail Boeing's
chances for the deal.
The contract, negotiated over the course of three
consecutive Brazilian presidencies, will supply Brazil's air
force with 36 new Gripen NG fighters through 2023. Aside from
the cost of the jets themselves, the agreement is also expected
to generate billions of additional dollars in future supply and
service contracts.
Saab did not immediately comment on the purchase.
In addition to Chicago-based Boeing, France's Dassault
Aviation was a contender for the contract.
The timing of the announcement, after a decade of off-and-on
negotiations, appeared to catch even the companies involved by
surprise.
Brazilian officials said the purchase, one of the most
coveted defense contracts anywhere for an emerging market, was
sealed after Brazil decided that Saab provided the most
affordable option for the new jets as well as the best
conditions for technology transfer to local partners that would
be necessary for upkeep and service on the jets.
The choice, Defense Minister Celso Amorim said, "took into
account performance, the effective transfer of technology and
costs - not just of acquisition but of maintenance."
Until earlier this year, Boeing had been considered the
frontrunner for the purchase. But revelations of spying by the
U.S. National Security Agency in Brazil, including the personal
telephone calls and emails of President Dilma Rousseff herself,
led Brazil to believe that it could not trust a U.S. company.
"The NSA problem ruined it for the Americans," a Brazilian
government source said on condition of anonymity.
Boeing called the decision a "disappointment" in a
statement, but added that it would continue to work with
Brazil
to meet its defense requirements. Dassault declined to comment.
Brazil coexists peacefully with all of its South American
neighbors and has no enemies elsewhere. The country, however, is
eager to fortify its military as it considers the long-term
defense of its vast borders and abundant natural resources,
including the Amazon rainforest and massive new offshore oil
discoveries.
The decision unexpectedly wraps up a tortuous and prolonged
decision-making process that in some defense circles had made
the negotiations the object of ridicule.
The deal meant serious business, though.
French President François Hollande personally lobbied for
Dassault last week during a state visit. Boeing, for its part,
was so committed to winning the contract that it opened a big
corporate office in Brazil and named
Donna Hrinak, a former U.S.
ambassador to the country, as its top executive there.
The timing of the announcement surprised many analysts, who
believed that the ongoing slowdown in Latin America's biggest
economy, coupled with Rousseff's expected bid for re-election
next year, would delay the purchase until 2015.
Indeed, the decision coincides with pressure on Rousseff
from economists, the private sector and political opponents to
curb public spending. Having initially stoked government
spending in efforts to spur growth, the president now faces
growing criticism because of creeping inflation and a worsening
outlook for the country's budgetary targets.
Still, the country's current fleet of Mirage fighters, which
the new jets will replace, is so old that the air force is in
the process of grounding them.
Saab's Gripen NG jet edged out Dassault's Rafale and
Boeing's F/A-18 Super Hornet.
The delta-winged Gripen, Swedish for Griffin, was first
introduced into service in the late 90's and is currently flown
by the Swedish, Hungarian, South African, Thai and Czech air
forces, according to the company's website.
Saab says the latest-generation Gripen NG has the lowest
logistical and operational costs of all fighters currently in
service.
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