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### Viewing cable 09BRASILIA41, THE FX2 COMPETITION -- THE GLIDEPATH TO SUCCESS

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
09BRASILIA41 | 2009-01-09 19:07 | 2010-12-05 12:12 | CONFIDENTIAL | Embassy Brasilia

`

    VZCZCXRO3655
    RR RUEHRG
    DE RUEHBR #0041/01 0091949
    ZNY CCCCC ZZH
    R 091949Z JAN 09
    FM AMEMBASSY BRASILIA
    TO RUEHC/SECSTATE WASHDC 3280
    RUEKJCS/SECDEF WASHDC
    INFO RUEHRG/AMCONSUL RECIFE 8907
    RUEHRI/AMCONSUL RIO DE JANEIRO 7090
    RUEHSO/AMCONSUL SAO PAULO 3332
    RHEHNSC/NSC WASHDC
    RUEKJCS/JOINT STAFF WASHDC
    RUCPDOC/DEPT OF COMMERCE WASHDC
    RHMFISS/CDR USSOUTHCOM MIAMI FL

` `

    C O N F I D E N T I A L SECTION 01 OF 03 BRASILIA 000041

    SIPDIS

    STATE FOR WHA AND PM, DEFENSE FOR DEPSECDEF, USDP, USD AT&L

    E.O. 12958: DECL: 01/08/2019
    TAGS: PREL ETTC MARR BR
    SUBJECT: THE FX2 COMPETITION -- THE GLIDEPATH TO SUCCESS

    REF: A. 08 BRASILIA 1589
    ¶B. 08 BRASILIA 1373 AND PREVIOUS
    ¶C. BRASILIA 34

    Classified By: Ambassador Clifford Sobel. Reason 1.5 (D)

    ¶1. (C) SUMMARY. The Boeing F18 Super Hornet has had
    success in establishing itself as a strong candidate to be
    Brazil's next generation fighter but still faces strong
    political opposition. To succeed, the USG and Boeing will
    need a coordinated strategy aimed at highlighting the Super
    Hornet's advantages, correcting misinformation and building
    confidence in the USG's support for the purchase. Ideally,
    this will involve ongoing outreach from the USG at high
    levels to the key Brazilian decision makers. See Paragraph 9
    for specific recommendations. END SUMMARY.

    ¶2. (C) As reported in ref a, the Boeing F18 Super Hornet
    has become a serious option in Brazil's fighter competition,
    and is acknowledged by contacts in the Brazilian Air Force as
    offering the best plane for a competitive price. Although
    these factors will continue to weigh in Boeing's favor, the
    Super Hornet cannot at this point be considered the favorite
    in the competition. There continues to be a strong
    preconception among many in policy circles that a purchase
    from France would be in Brazil's best interest, a view
    strengthened by the recent, well-publicized visit of
    President Sarkozy to Rio. Even though Sarkozy did not add
    any new substance to the "strategic partnership" (deals to
    sell helicopters and submarines were already well-known), the
    optic of the Presidential visit has worked in Dassault's
    favor.

    ¶3. (SBU) In the last week, there has been new focus in the
    Brazilian press on the fighter purchase, including some
    positive statements from Boeing officials and accurate
    reporting that the Rafale's high price and limited
    capabilities have caused it to lose every foreign sale for
    which it has thus far competed. French representatives have
    tried to spin the Rafale's dismal performance in the global
    market to be the result USG political pressure rather than
    the aircraft's shortcomings. The continuing challenge for
    Boeing in press reporting is the ongoing assumption that
    there is a risk to choosing the Super Hornet that the USG
    will exercise some sort of "veto" over the sale at a later
    date.

    ELEMENTS OF A SUCCESSFUL BID
    ----------------------------
    ¶4. (C) As noted in reftels, the FX2 decision will not be
    based on the capabilities of the aircraft selected and will
    only be marginally influenced by the price. Brazilian
    decision makers will be looking at the offers of the
    competitors to determine which will benefit Brazil,
    particularly Brazilian defense industry. Boeing, with its
    worldwide business and access to commercial aircraft
    production will have an attractive offer, but faces a
    challenge. Both Dassault and Saab are offering essentially
    new planes, not yet in production. They are therefore able
    to offer Brazil whatever role it wants in the fabrication of
    the planes, not just the final assembly that Boeing will
    offer.

    ¶5. (C) Ref b highlighted the critical importance of
    technology transfer. With current efforts in Washington to
    approve technology sharing to the fullest extent possible, we
    expect Boeing will have a strong offer by the Feb. 2 deadline
    to respond to the Request for Proposal (RFP). It will be
    vital, before the final response goes forward, to ensure that
    it meets all Brazilian requirements. As noted in ref b, it
    will be critical for the Boeing offer to keep open the
    possibility of integrating Brazilian made weapons on the F18
    at some point. Given the huge emphasis the new National
    Defense Strategy places on support to Brazilian industry,
    excluding any opportunity for indigenous products to be used
    would be a major blow to Boeing's chances.

    ¶6. (C) It will be as important as approving the tech
    transfer itself to overcome the assumption that the USG can
    step in at a later date to restrict the transfer. While we
    can explain that we stopped transfer of F16s to Venezuela
    because of setbacks in democratic governance and interference
    in the security of neighboring states -- circumstances

    BRASILIA 00000041 002 OF 003

    unthinkable in the Brazilian context -- the Brazilians tend
    to take the fact that we stopped the transfer as evidence
    that the United States is an unreliable supplier. To combat
    this assumption will require ongoing high level USG
    assurances, both directly to the Brazilian leadership and
    publicly, that we can foresee no circumstance in which we
    would restrict the transfer of fighters to Brazil. As the
    State Department is perceived by Brazilians as the most
    likely source of a potential veto, it will be critical for
    high level Department involvement in this effort.

    ¶7. (C) In ref b, post reported on the Brazilian Air Force's
    likely requirements for financing of the new fighters. With
    the USG's long experience in Foreign Military sales, it
    should be possible to work out a set of financing
    arrangements that would offer an advantage over the
    competition, especially since Boeing believes its aircraft
    will have the lowest life cycle costs.

    KEY PLAYERS
    -----------
    ¶8. (C) The strongest supporters of the Super Hornet are
    likely to be the military leadership, in particular Brazilian
    Air Force chief Brig. Junito Saito, who we believe perceive
    the Boeing offer as the best deal on the best aircraft and
    see the United States military as the better choice of a
    partner going forward. We may also be able to garner support
    from Brazilian industry, including Embraer, if Boeing can
    offer strong prospects for longer-term cooperation and mutual
    profit. While the initial review of the proposals will be
    done by the Air Force, final decisions will be made at higher
    levels of the Brazilian government. The final decision will
    be made by President Lula, who is likely to take a more
    pragmatic view of which offer would most benefit Brazil, but
    will also be swayed by arguments regarding how the purchase
    will affect Brazil's standing as an independent global power.
    In making a recommendation to Lula, Defense Minister Jobim
    will play the key role at the policy level. While Jobim has
    a good relationship with the USG, he has been a strong public
    supporter of the strategic partnership with France. Foreign
    Minister Amorim and Minister for Strategic Planning Roberto
    Mangabeira Unger will also have a say; both see a purchase
    from the U.S. as leading to an undesirable "dependency."
    Finally, presidential advisors, including Civilian Household
    Minister Dilma Rousseff and Foreign Policy Advisor Marco
    Aurelio Garcia, will likely serve as sounding boards for Lula
    as he makes a decision.

    RECOMMENDATIONS
    ---------------
    ¶9. (C) As we look to the next three to four months as the
    key period in which the fighter competition may be won, there
    are several opportunities for the USG to maximize our chances:

    -- The key step for the USG over the next month will be to
    get the question of technology transfer right. While the
    Brazilians will not get the keys to the proverbial candy
    store, there should be enough sweeteners in Boeing's offer to
    make the case that the Super Hornet includes the best tech.
    The offer must also address the key points raised in ref b
    (source codes, weapons integration, etc.).

    -- Once the RFP response is in, we should be prepared to
    raise the FX2 at every high level contact with Brazil. There
    has been a perception that USG support is weak that needs to
    be countered. The most effective way of doing so would be to
    have President Obama make a strong statement advocating the
    Super Hornet to President Lula at the earliest opportunity.
    The President Elect's outstanding popularity with Brazilians,
    the personal affinity that Lula has publicly expressed, and
    the high expectations for relations with the new U.S.
    Administration will ensure that his advocacy will have an
    impact.

    -- We should follow up the RFP response submission with
    visits from appropriate officials to reassure the Brazilian
    government of USG support for Boeing's proposal. Ideally,
    this would begin with an interagency team (State, OSD, DTSA,
    SOUTHCOM) visit in February at Assistant Secretary level to
    try to put to rest the notion that there could be a USG veto.
    Visits should include a public diplomacy component.

    -- Government to government efforts should be supplemented

    BRASILIA 00000041 003 OF 003

    by improved outreach to highlight the advantages of the Super
    Hornet and counter misinformation campaigns from the other
    competitors that the USG will not be a reliable partner.

    -- Washington agencies should be prepared to receive BRAF
    finance representatives in February to discus likely
    Brazilian requirements.
    SOBEL

`