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### Viewing cable 04BRASILIA3154, F-X FIGHTER PROGRAM TO END WITH A WHIMPER ON NEW

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
04BRASILIA3154 | 2004-12-22 18:06 | 2010-12-21 19:07 | CONFIDENTIAL | Embassy Brasilia

`

    This record is a partial extract of the original cable. The full text of the original cable is not available.

` `

    C O N F I D E N T I A L SECTION 01 OF 03 BRASILIA 003154

    SIPDIS

    SENSITIVE

    E.O. 12958: DECL: 12/21/2014
    TAGS: MCAP MARR MASS PREL BR POL MIL
    SUBJECT: F-X FIGHTER PROGRAM TO END WITH A WHIMPER ON NEW
    YEAR'S DAY

    REF: BRASILIA 2890

    Classified By: Deputy Chief of Mission Philip Chicola, reasons
    1.4 (b &
    d)

    ¶1. (C) SUMMARY: At midnight, December 31st, Brazil's F-X
    jet fighter competition will come to an end. Ultimately, a
    decision on the costly program proved to be politically
    untenable for the Lula administration. Given all the urgent
    requirements of Brazil's armed forces, the F-X was an expense
    that was hard to justify. Competitors for the F-X are
    refusing to go down quietly, but they are fighting a losing
    battle. With the end of the F-X, the GOB may review whether
    to purchase less costly used aircraft. In this regard, the
    Lockheed Martin F-16 would have the inside track. However,
    it is possible that the GOB may base a decision on used F-16s
    in the context of its continued questions about the U.S. as a
    reliable supplier. End Summary

    The F-X Program, RIP
    --------------------

    ¶2. (SBU) On December 31, the Best and Final Offers (BOFAs)
    for the competition to select Brazil's new generation high
    performance jet fighter (F-X) will expire. Despite repeated
    GOB postponements during the past 12 months on a decision,
    the F-X program had still retained a breath of life thanks to
    repeated hints from former Defense Minister Viegas that a F-X
    award decision would be forthcoming. Throughout the process,
    however, the Lula administration was reluctant to commit to a
    choice. With the end of the validity of the BOFAs next week,
    the F-X program will be officially dead.

    ¶3. (SBU) The principal cause of the program's demise, most
    observers agree, was the F-X program's steep price tag,
    around $700 million plus for the purchase of a dozen high
    performance aircraft. The huge cost, at a time when the Lula
    administration was engaged in fiscal austerity, made the
    program a politically impossible sell. (Note: The Brazilian
    Congress, which still has not concluded the 2005 budget, has
    not included jet fighters in its budget, and, in fact,
    provides very little money overall for defense. End Note.)
    Yet, until November, more than a few senior Brazilian Air
    Force (FAB) officers held out hope that FAB would get its new
    jets. When Russian President Putin departed Brazil last
    month without a deal in place for the Sukhoi SU-35 -- after
    offering to purchase 50 Embraer commercial aircraft as a deal
    sweetener and certainly dangling a possible agreement on
    ending the Russian embargo on Brazilian beef -- the last best
    chance for new fighter aircraft for FAB left with him
    (reftel).

    ¶4. (SBU) Other factors contributed to the F-X impasse. The
    Brazilian military's almost insatiable need for weapons
    systems upgrade and procurement required that the GOB triage
    the competing demands for funding. FAB already had been
    granted approval for buying ten new Black Hawk helicopters
    (about $153 million). With both the army and navy biting at
    FAB's heels for funding their own urgent requirements, the
    new jet fighters became a harder sell.

    ¶5. (SBU) In view of the lack of any perceived threat, the
    strategic question of whether Brazil needed the F-X whose
    primary purpose was protection of the national capital, has
    received relatively little debate. The program itself
    ultimately owed its continued rationale less to the defense
    of Brasilia than as a tool of national pride, particularly
    following Chile's purchase of F-16s. Even some air force
    generals admit the principal current threat to Brazilian
    sovereignty (from narco-trafficers) can be addressed less
    expensively by other air force elements such as FAB's Super
    Tucanos.

    ¶6. (SBU) Meanwhile, F-X competitors are refusing to go down
    without a fight. Planted news articles in praise of one
    aircraft or attacking another (usually the F-16, and the
    alleged, and false, denial by the USG to provide AAMRAM
    capability to Brazil) continue to pop up. The most recent
    example of F-X muckraking is a cover story this week in
    left-leaning nationalist magazine Carta Capital in praise of
    the Mirage 2000 of the Embraer-Dassault consortium. In the
    Carta Capital article, Embraer President Mauricio Botelho, in
    a direct swipe at Lockheed-Martin, is quoted as saying that
    because the USG won't allow it, U.S. companies offer "no
    chance" for transfer of military-related technology -- a
    bizarre comment in the wake of the winning
    Embraer--Lockheed-Martin bid for the development of the U.S.
    Army's Aerial Common Sensor System aircraft. Even Sweden's
    Grippen aircraft has received high profile lobbying with a
    prominent billboard at the entrance to Brasilia airport.

    Used Aircraft?
    --------------

    ¶7. (SBU) Throughout much of the long-running F-X
    competition -- while Lockheed Martin's F-16 was one of the
    competitors -- the U.S. company had urged the GOB consider
    the purchase of used F-16s as a significantly less costly
    option to the F-X. Although an attempt by Lockheed-Martin in
    early 2003 to ally with Varig Engineering and Maintenance
    (VEM) for a proposed upgrade of used F-16s fell through, the
    company remains upbeat it will be able to partner with a
    Brazilian firm (possibly Embraer) to craft an attractive used
    aircraft offer. Ultimately, Lockheed Martin believes it can
    provide fully capable F-16 aircraft at less than half the
    cost of the F-X. (Note: One driving factor, however, will be
    the ability of FAB to conduct inter-operable aerial refueling
    for any fighter. Brazil is considering purchasing two or
    three KC-135s to augment their refueling capability.
    Procurement of KC-135s from the U.S. would be a positive
    indicator for purchase of used F-16s. End note.)

    ¶8. (SBU) In recognition that new aircraft will be
    unobtainable, senior FAB leadership, including FAB's probable
    next Commander in Chief, increasingly have come around to
    accepting used F-16s as Brazil's best aircraft option. In
    this context, the F-16 appears to have the inside track over
    other used aircraft options, although there are rumors that
    some in FAB may be looking at procuring used South African
    Cheetahs, a modified Mirage III aircraft one generation older
    than the early F-16 models. Meanwhile, the Brazilian
    Congress which has been absent from the F-X debate, may get
    into the picture. In a discussion with emboffs, a prominent
    Deputy on the National Defense Committee stated he intended
    to hold hearings in 2005 on used fighter aircraft with an eye
    to promoting the F-16 as Brazil's best option.

    ¶9. (C) Comment: We expect that Brazil will continue to
    seek the aquisition of high performance jet fighters for
    reasons of national pride, if nothing else. U.S. Mission
    Brazil will continue to support the used F-16 option as the
    most logical way forward both tactically and economically.
    An increasing number of FAB generals appear to support this
    view. However, even though Brazil has moved forward on the
    purchase of other weapons systems, we suspect the GOB may not
    agree to purchase the F-16 unless it achieves an adequate
    comfort level on all aspects of the bilateral pol-mil
    relationship. As Brazil observes the bite that ASPA is
    taking on countries that do not sign Article 98 agreements,
    it questions about the reliability of the U.S. as a
    supplier/strategic partner will continue, thus further
    complicating the used F-16 aquisition option.

    Danilovich

`