France slims jets price in Brazil bid

BRASILIA, Brazil, Feb. 5 (UPI) -- Brazil looks set to purchase 36 Rafale fighter jets from France after its maker, Dassault, moved to skim $2 billion off the price.

The newspaper Folha de S. Paolo reported that the deal was now down to $10.2 billion -- including $6.2 billion for the jets themselves and $4 billion for maintenance and repairs provided for the next decade.

News of the price cut surfaced following a brief stop-over that Defense Minister Nelson Jobim paid to Paris while en route to Israel. There was no immediate confirmation of the Folha de S. Paolo report and a Dassault spokesman in Paris said the company was still waiting for the Brazilian government to make its choice.

Since the tender was called, Rafale -- competing against Boeing's F-28 and Saab's Gripen NG -- has been seen as the most likely choice of Brazilian President Luiz Inacio Lula da Silva.

The process has since them been held up pending delivery of the Brazilian government of an air force technical assessment of the three contenders.

Despite the purported price cut, the Rafale remains the most expensive bid among the competing aerospace companies. The Boeing package is valued at $7.6 billion and the Saab offer at $6 billion, Folha da S. Paolo reported.

On Thursday, however, Brazil's government denied the newspaper report, saying that the country's president "still has not decided on the selection process."

Jobim also billed the report "unfounded," adding that the purchase had not been concluded.

France has pledged to transfer all technology related to the supersonic Rafale so that Brazil, bent on becoming the lead military power in South America, could assemble most of the jets itself and sell them regionally.

By some accounts, the contract for the initial 36 planes could rise to more than 120.

Brazil has already signed a deal with the French for the construction of five submarines in Brazil. The deal also includes building a nuclear-powered vessel.

What's more, the multibillion-dollar deal would help offset the downturn at Dassault's jet division.

French President Nicolas Sarkozy, also, has a lot of personal prestige knotted into the deal.

In September 2009, Sarkozy and his Brazilian counterpart looked locked in a deal, issuing a joint statement that negotiations for the purchase had begun when the tender process had not been concluded.

Lula's preference for the Rafale has been evident from the start but under pressure from the military establishment the government kept the competition open.

The final decision though, rests with Lula, who has said that the pick will be determined by "political and strategic" considerations, not just the price tag.