Instead Lula is leaving the decision to his successor, President-elect Dilma Rousseff, who takes office Jan. 1, Lula told official television station TV Brasil.
The United States, France and Sweden are in the race to win a contract that includes an option to buy another 100 jets from the successful supplier over the coming decades.
Sweden's King Carl XVI Gustaf weighed in to support of SAAB's Grippen fighter, French President Nicholas Sarkozy openly canvassed for Dassault's Rafale and White House support behind Boeing's F-18 fighter was widely reported in Brazil.
Lula indicated he favored buying Rafale as France offered the best technology transfer deal and expressed concern the U.S. Congress might block or restrict any Boeing deal. Grippen won support from Brazil's military strategists because of its lower cost. Swedish lobbyists also took mileage out of Queen Silvia's Latin American connection as the offspring of a German father and Brazilian mother.
High-powered lobbyists from the rivals have frequently beaten the path of the capital, Brasilia, but have failed to glean any useful information on which way Brazil would go next year.
"It's a very big debt, it's a long-term debt for Brazil," Lula said in comments cited by Agencia Brazil and MercoPress during the television appearance.
"I could sign off on it and do a deal with France but I'm not going to do that," Lula said. Critics of Rafale say the jet fighter has never been sold outside France and Dassault hopes to use a sale to kick-start a global marketing campaign. Dassault has its eyes on India and Kuwait among potential customers for Rafale.
Lula said the final decision would rest with Brazil's National Defense Council, which includes Cabinet ministers, armed forces commanders and the president.
Defense Minister Nelson Jobim, who has been closely involved with the negotiations with Dassault, Saab NG and the Boeing Co., will continue his job in the new administration.
Jobim echoed Lula's view that the French offer was the best because of its technology transfer package but senior Brazilian air force commanders favored the F-18 despite a smaller technology transfer package. Supporters for cost-effective Grippen also weighed in but analysts said the Swedish bid still faced more critics within Brazil's decision-making machinery.
The choice of a jet fighter for a fast modernizing air force ties in with Rousseff's plans to create a new civil aviation secretariat that will incorporate departments under defense. The plan is part of an urgent strategy to reverse the poor reputation of Brazilian aviation infrastructure ahead of the 2014 World Cup and 2016 Olympics.
Officials say the new government is keen to begin an extensive overhaul of Brazilian aviation -- both civil and military -- and promote more sophisticated manufacturing of aircraft for expanding national networks and for export.