U.S. mulls backing Brazil jet deal terms on technology transfer

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WASHINGTON, Feb. 22 (UPI) -- The United States is keen to assure Brazil it can have technology transfer terms similar to those offered by France or Sweden when considering purchase of 36 fighter jets worth $4 billion-$7 billion, congressional reports said.

The Boeing Co. is in the race alongside Dassault Aviation of France and Sweden's Saab for the multibillion-dollar contract, which has pitted Boeing's F-18 Super Hornet against Dassault's Rafale and Saab's Gripen NG.

French President Nicolas Sarkozy vigorously lobbied former Brazilian President Luiz Inacio Lula da Silva and appeared on the verge of securing the deal.

However, weeks before relinquishing office at the end of his second term, Lula passed over a decision on the fighter deal to President Dilma Rousseff, who assumed office in January.

The handover delayed a decision on the deal and soon gave way to a comprehensive rethink by Rousseff of Brazil's defense expenditure and procurement program. The new president, faced with mounting financial pressures over an overvalued real and declining export revenue, ordered cuts in defense spending.

Rousseff's arrival also signaled a rewarming of relations between Brazil and the United States and a revival of efforts to get Boeing back into the picture over the contract.

Lula's populist policies and occasional criticism of U.S.-Brazil relations and the Brazilian military's concern that the U.S. supplier might not be as generous as the French with military technology transfers had dampened hopes in Washington that Boeing could sway Brazil while support for France remained strong.

This week congressional sources cited support for Brazil as a potential "close" partner.

"I would argue that the technology transfer that we are offering of this magnitude would put Brazil at par with our close partners," Frank Mora, U.S. deputy assistant secretary of defense for Western Hemisphere affairs, told a congressional committee.

When asked if it was correct that Brazil shouldn't have doubts about a U.S. commitment on the technology transfer, he replied, "That is correct."

"The United States has made a robust proposal of the Super Hornet technology -- a significant technology transfer," he said.

The initial contract, when signed, will give the winning supplier the first order to deliver 36 fighters and preferential consideration to supply many more aircraft.

Brazil has a developed aircraft manufacturing industry competing with U.S. suppliers in the international marketplace for small executive jets and transport aircraft but it doesn't produce anything close to the high-tech fighters offered by Boeing, Dassault and Saab.

Saab's Gripen NG is powered by the General Electric F414G, a development of the F/A-18E/F Super Hornet's engine. Rafale has never sold outside France but Lula was drawn to the French over an offer of wide-ranging technology transfers, including help with the building of nuclear-powered submarines in a Brazilian shipyard.

The latest U.S. comments firmly put Boeing's F-18 Super Hornet back into the race.

Arturo Valenzuela, assistant U.S. secretary of state for Western Hemisphere affairs, said during the hearing that "we always raise this issue" of technology transfer over the fighter deal in talks between Brazil and the United States.

U.S. President Barack Obama is to visit Brazil in late March as part of a tour that includes stops in Chile and El Salvador. Last April, Brazil and the United States signed a military cooperation agreement, which is likely to be developed after further talks between the two sides.