* Rousseff voices preference for Boeing in jets tender
* Brazil seeks more guarantees on technology, better terms
* Rousseff sees deal as way of bolstering ties with U.S.
(Adds details, context)
By Brian Winter
SAO PAULO, Feb 8 Brazilian President Dilma
Rousseff has told visitors she believes Boeing's (BA.N) F-18 is
the best jet among three finalists in a multi-billion dollar
Air Force fighter tender, but she is still pressing for better
terms on technology transfers that are critical to any deal.
Rousseff raised the issue of the jet tender during a
meeting in Brasilia on Monday with U.S. Treasury Secretary
Timothy Geithner, sources with knowledge of the conversation
told Reuters. They spoke on condition of anonymity because of
the sensitivity of the talks.
Rousseff told Geithner she considered the purchase of at
least three dozen jets as a way to not only modernize Brazil's
Air Force but also potentially to improve strategic and trade
ties with the United States -- a major goal of her foreign
policy since taking office on Jan. 1.
However, Rousseff said she remained concerned about the
transfers of proprietary technology that Brazil wants as a way
to help develop its own defense industry as part of any deal.
She is seeking both improved terms from Boeing and further
guarantees from the U.S. government that it will allow
sensitive military technology to change hands, the sources
The other finalists in the bidding process are the Rafale
jet built by France's Dassault (AVMD.PA) and the Gripen NG
produced by Sweden's Saab (SAABb.ST).
Rousseff's comments -- plus her previous decision to delay
the tender instead of immediately awarding it to Dassault, as
many of her defense chiefs wanted -- suggest that she is
leaning toward the Boeing bid but is still pressing companies
to come up with better terms in a deal that will shape Brazil's
defense alliances for decades to come. [ID:nN18151639]
A spokesman for Rousseff's office declined comment.
Boeing spokeswoman Marcia Costley said the technology
transfer guarantee was an issue that would be decided by the
The company is willing to provide Brazil with further
technological know-how and other assistance in areas such as
transport, satellites and weapons systems as part of the deal,
"Boeing has the capability and resources to live up to its
promises on ... technology transfer and the track record to
prove it," Costley said via e-mail.
OBAMA TO VISIT IN MARCH
The contract -- which will be worth at least $4 billion,
not including lucrative maintenance deals and possible
additional purchases -- has suffered several delays during the
past decade as Brazilian leaders struggle to balance the Air
Force's needs against diplomacy, cost and other factors.
Rousseff has made the development of national
industries one of the centerpieces of her government, and it is
conceivable that she could choose a jet she considers inferior
if it provided a bigger boost to Brazilian industry.
The three finalists have already been working to improve
their bids since Reuters first reported on Jan. 17 that
Rousseff would delay the tender.
Officials for one company told Reuters they had submitted
their most recent bid more than a year ago, so they would have
to recalculate the terms. The officials declined to be
identified because of the competitive nature of the process.
Meanwhile, the U.S. government is working to provide the
additional guarantees Rousseff seeks. U.S. Secretary of State
Hillary Clinton has already provided a written guarantee that
any deal with Boeing would be respected by the U.S. government,
but Rousseff has asked for additional backing in the form of
some kind of resolution from the U.S. Congress.
U.S. President Barack Obama is due to make his first visit
to Brazil in March, which could advance the deal further.
Dassault officials continue to press their case. Dassault
Aviation exports chief Eric Trappier told reporters last
weekend that it was ready to transfer all of its available
technologies to Brazil if it won the contract.
One silver lining for the companies: Instead of starting
the tender process from zero, Rousseff is seeking modifications
to the existing bids and is likely to make a decision on the
contract by the end of the year, an adviser said.
(Additional reporting by Cyril Altmeyerhenzien in Paris,
Editing by Todd Benson and Ted Kerr)