Brazil "very likely" to choose French fighter jet: sources

Sun Feb 12, 2012 8:33pm EST
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By Brian Winter

SAO PAULO (Reuters) - Brazil is "very likely" to choose France's Rafale fighter jet to refurbish its air force, government sources say, a decision that would award one of the emerging-market world's most coveted defense contracts to a jet whose future was in doubt only two weeks ago.

President Dilma Rousseff and her top advisers believe that Dassault Aviation's (AVMD.PA: Quote) bid to sell at least 36 Rafales offers the best terms among the three finalists, the sources told Reuters on condition of anonymity.

The other two bidders are Boeing's (BA.N: Quote) F-18 and Saab's (SAABb.ST: Quote) Gripen.

Rousseff has cast the deal as a watershed decision that will help mold Brazil's military and strategic alliances for the next few decades as it continues to establish itself as a leading economic power. The contract will have an initial value of about $4 billion but will likely be worth considerably more over time once maintenance and follow-on orders are included.

Rousseff previously had concerns about the Rafale because the jet had not found any buyers outside France. That raised doubts about whether Dassault would have the scale necessary to build the jets at a reasonable cost and maintain them over time.

The sources said those concerns were assuaged when India announced on January 31 that it had entered exclusive talks to buy 126 Rafales. Brazilian Defense Minister Celso Amorim traveled to New Delhi last week to discuss the deal with Indian officials and examine documents related to Dassault's bid.

"The India deal changed everything," one of the Brazilian sources said. "With India's decision, it's now very likely the Rafale will be the winner here."

The sources said that Dassault offered the best combination of a high-quality aircraft and the sharing of proprietary technology that Amorim has said is critical to the deal. Brazil hopes to use that technology to expand its own budding defense industry, led by aircraft maker Embraer (EMBR3.SA: Quote).   Continued...

<p>A Dassault Rafale fighter takes part in a flying display during the 49th Paris Air Show at the Le Bourget airport near Paris June 26, 2011. REUTERS/Gonzalo Fuentes</p>