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Viewing cable 09BRASILIA613, LAAD ,09 -- DEFENSE MODERNIZATION MEANS BUSINESS
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Reference ID | Created | Released | Classification | Origin |
---|---|---|---|---|
09BRASILIA613 | 2009-05-15 12:51 | 2011-07-11 00:00 | CONFIDENTIAL | Embassy Brasilia |
VZCZCXRO5481
RR RUEHAO RUEHCD RUEHGA RUEHGD RUEHHA RUEHHO RUEHMC RUEHMT RUEHNG
RUEHNL RUEHQU RUEHRD RUEHRG RUEHRS RUEHTM RUEHVC
DE RUEHBR #0613/01 1351251
ZNY CCCCC ZZH
R 151251Z MAY 09
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC 4299
RUEKJCS/SECDEF WASHDC
INFO RUEHWH/WESTERN HEMISPHERIC AFFAIRS DIPL POSTS
RUEKJCS/JOINT STAFF WASHDC
RHEHNSC/NSC WASHDC
RHMFISS/CDR USSOUTHCOM MIAMI FL
C O N F I D E N T I A L SECTION 01 OF 02 BRASILIA 000613
SIPDIS
STATE FOR WHA/BSC, PM/RSAT
E.O. 12958: DECL: 05/07/2019
TAGS: PREL ETTC BR
SUBJECT: LAAD ,09 -- DEFENSE MODERNIZATION MEANS BUSINESS
Classified By: DCM Lisa Kubiske. Reason: 1.4 (d)
¶1. (C) SUMMARY. The April 14-17 Latin America Aerospace
and Defense (LAAD) show in Rio de Janeiro provided evidence
that despite the downturns in the economies of Brazil and its
neighbors, defense manufacturers still see opportunities for
business. As a result of Brazil's recently published a new
defense strategy committing the government to modernization
of the armed forces, notably through a multi-billion dollar
purchase of fighter aircraft, LAAD 09 featured almost fifty
percent more exhibitors than the ,07 version and received
attention from Brazil,s leaders, including President Lula.
In addition to foreign vendors, LAAD ,09 included displays
from a large number of Brazilian manufacturers, and Lula and
Defense Minister Jobim devoted significant portions of their
visits to the show to promoting Brazilian business. U.S.
firms participating in the show expressed concern that the
USG overcome GOB perceptions that the U.S. is reluctant to
transfer technology and showed appreciation for USG support
to U.S. exports. The competition for Brazil,s next
generation fighter (known locally as the FX2) was the big
story of the show, with Boeing receiving positive coverage
for its offer of the F18 Super Hornet, although doubts
remained about USG commitment to the program. Its
competitors, France,s Dassault and Sweden,s Saab, made
energetic efforts to promote their aircraft. The French
(incorrectly) hyped their entry,s "one hundred per cent"
French content as an advantage of their entry. END SUMMARY.
¶2. (SBU) LAAD ,09 featured over 100 exhibitors showcasing
aerospace, defense and security products. While much of the
focus was on big ticket items such as aircraft and naval
systems, there was also considerable interest in police
equipment, firearms and surveillance systems. Organizers
estimated that the show was fifty percent larger than that of
two years ago. The major reason for the increased interest
was the perception that Brazil, the region,s largest
economy, will be increasing defense spending as it modernizes
its armed forces. Brazilian exhibitors occupied
approximately twenty percent of the exhibit space, promoting
sales of vehicles, aircraft, weapons and ammunition. Both
President Lula and Defense Minister Jobim made it a priority
of their visits to LAAD to highlight the Brazilian
exhibitors. The highlight of the show for the Brazilian
press was that Jobim signed an agreement with Embraer for the
eventual purchase of C390 transport aircraft, ostensibly to
replace Brazil,s C130 fleet. This focus on Brazilian
business was consistent with the recommendations of the
December 2008 Defense Strategy Document which stated that
Brazilian procurement should be from Brazilian manufacturers
and that purchase of military items from foreign sources
would only be justified to obtain technology that would allow
for eventual domestic production.
¶3. (SBU) Despite the hype for products made in Brazil, much
of the real attention at the show was on U.S. and European
products. Exhibitors from Italy, Russia and the UK made a
splash with impressive displays (and free espresso from the
Italians) as did an extensive Israeli area. U.S.
participants included Lockheed Martin, Boeing, Northrup
Grumman, Hughes, Raytheon and many smaller firms. Mission
Brazil officers spent much of the four day show meeting with
the U.S. participants to discuss doing business with Brazil.
The most common concern of the U.S. forms was whether the
slowdown in Brazil,s economy would affect defense
modernization plans. Most believed that while the scope of
some projects might be reduced, overall there would be
significantly more funding for defense projects than in the
past. U.S. businesses also echoed Brazilian concerns that
restrictive USG export control policies could put them at a
disadvantage to foreign competitors. Mission members pointed
out that there were no specific export restrictions toward
Brazil and recent approvals of technology for the FX2
competition could provide skeptical Brazilians an example
that U.S. export controls, though rigorous, will not block
business with our partners. Several U.S. exhibitors also
commented that they had heard from Brazilian partners that
Brazil is predisposed to purchase French products because of
the personal friendship between Presidents Lula and Sarkozy.
The presence of Mission personnel from FCS, MLO, DAO and
State elicited a strongly positive response from U.S.
participants, as did Ambassador Sobel,s remarks at the
Foreign Commercial Service's April 14 breakfast for U.S.
businesses.
OPPORTUNITIES FOR U.S. BUSINESS
--------------------------------------------- -----
BRASILIA 00000613 002 OF 002
¶4. (C) U.S. firms saw several strong opportunities to make
sales to Brazil. As noted in paragraph 2, the Brazilian Air
Force made a splash by announcing a deal with Embraer for
transport aircraft. Lockheed representatives, however, were
quick to point out that developing a cost effective
replacement for the C130 has not been easy, citing EADS,
difficulties. Furthermore, the proposed Embraer transport
will have difficulty operating on some of Brazil,s more
remote airfields, requiring either large expenditures for
upgrades or the retention of the more versatile C130.
Raytheon saw the potential for providing electronics systems
to the Brazilian navy as part of a deal with Korean
shipbuilders to construct new coastal patrol vessels in
Brazil. Hughes conducted discussions with the Brazilian army
on a field communications system that will enhance security
and reliability, while allowing for interoperability with
allied forces. Lockheed also saw potential for sales of
electronic equipment to Brazil as part of its purchase of
four French-made submarines.
¶5. (C) The most important single upcoming purchase for
Brazil will be the next generation fighter. The centerpiece
of Boeing,s exhibit was a simulator for the Super Hornet
that allowed Brazilian pilots and aviation fans some hands on
experience of operating the aircraft. Boeing Vice President
Robert Gower and SOUTHCOM Deputy Commander Lt. Gen. Glenn
Spears held a joint press conference in which Gower
underlined the industrial partnership Boeing hopes told build
in Brazil, and Spears confirmed that the U.S. has approved
relevant transfers of technology. While the press conference
produced a good response, the perception among Brazilian
remains that the Super Hornet trails in the competition, in
part because Boeing is relying on the plane,s superior
capabilities to sell itself and in part because of the lower
level of U.S. government engagement when compared to its
competitors, particularly France. This has made USG efforts
to assure the Brazilian Air Force that tech transfers will be
made more difficult.
¶6. (SBU) The other FX2 finalists, Dassault and Saab, pulled
out all the stops to sell their aircraft. The Swedish case
rested on the fact that they are submitting a new version of
the Gripen, giving Brazilian firms the opportunity to
participate in almost all areas of production from the
beginning. Saab also focused on the positive capabilities of
its entry, including the ability to use short runways as a
selling point, overlooking the Gripen,s overall less capable
performance. The Swedes have also begun an advertising
campaign touting Sweden as the "independent choice," seeking
to appeal to Brazilian aspirations to be a military power
free from reliance on allied militaries. The French display
was among the largest at the show, but unlike Boeing and
Saab, focused on a single product: the Rafale fighter.
Glossy displays on the aircraft,s capabilities surrounded a
model of the Rafale that was bigger than some of the UAVs on
display in other exhibits. Brazilian Air Force members
attending and at least two journalists speaking with Mission
members reported that the French were portraying the Rafale
as Brazil,s safest choice because it had 100 per cent French
content (and therefore would be presumably free of meddlesome
U.S. export controls). According to Mission information,
this is untrue and all three competitors will be subject to
the ITAR. Russia also presented a display on the SU35, for
which Russian officials have appealed to MOD Jobim for
reinstatement into the FX2 competition. There was no
indication, however, from the Brazilian Air Force that the
Russians would be reconsidered.
SOBEL