* Brazil "surprised" with U.S. plane contract decision
* Says move "doesn't help" bilateral defense programs
* U.S. gov't "still interested" in Embraer aircraft
* Brazil to remain in talks with U.S. over decision
By Jeb Blount and Guillermo Parra-Bernal
RIO DE JANEIRO/SÃO PAULO, March 1 A
decision by the United States to cancel a $355 million defense
aircraft contract with Brazilian planemaker Embraer
has surprised the government of Brazil which had hoped for the
development of a bilateral defense program, Brazil's Foreign
Affairs Ministry said on Thursday.
The ministry said in a statement that the government was
"surprised" with the cancellation "especially with the way that
it happened and the timing." The U.S. Air Force earlier this
week called off the purchase of 20 Embraer's Super Tucano jets
due to problems with documentation.
The light, ground-attack aircraft was sought to provide
close air support for the Afghan Army in the field and as a
turbo-prop training plane for Afghan Air Force pilots. With
future orders, the contract is believed to be worth as much as
"The government believes that this situation doesn't help to
the progress of bilateral relations on the defense area," the
The cancellation comes as the U.S. seeks to sell fighter
aircraft to Brazil. Boeing Co's F-18 "Super Hornet"
fighter is in competition with Dassault's Rafale and
Saab's "Gripen NG" for an order of at least 36 jets
for Brazil's Air Force.
Reuters reported on Feb. 12, citing unnamed government
sources, that Brazil is "very likely" to choose Dassault in the
bid. The cancellation of the Embraer deal caused some senior
figures within President Dilma Rousseff's administration to
wonder if it was retaliation for Boeing reportedly falling out
of favor, officials told Reuters this week.
Early on Thursday, U.S. Deputy Secretary of State William J.
Burns said in Rio de Janeiro that his country is still
interested in acquiring the Embraer planes. The contract, which
was awarded to Embraer and Sierra Nevada Corp, also included the
supply of electronics and other services.
The U.S. Air Force blamed "faulty paperwork" for the
cancellation of the contract, which is also being challenged in
U.S. Federal court by the losing bidder, Hawker Beechcraft
"Embraer is obviously a great company and the Super Tucano
is a very fine aircraft," Burns said. "The United States is now
in the midst of some internal processes but we remain
Neither the Air Force nor Burns would elaborate on the
Burns sought to put concerns over mutual retaliation to
rest, saying that "these are separate contracts." The Brazilian
government will remain in talks with the United States over the
matter, the statement said.
"We're convinced that the F-18 is the best of the available
aircraft and a reflection of that is that it is the aircraft
that the United States is going to be using for the next 20 to
30 years," Burns said.
As part of the agreement Boeing will provide the technology
for Brazil to build much of the aircraft on its own, a key
factor for Brazilian politicians looking to boost their aircraft
industry and defense capabilities.
"We're convinced that the technology transfer package that
we're offering along with that aircraft (F-18) is unprecedented
in our relationship (with Brazil)" he said. "It is exactly the
same kind of package that we offer to our closest NATO
NATO members include Britain, Canada, France and Germany.
The U.S. Air Force chief of staff, General Norton Schwartz,
acknowledged earlier this week that the cancellation of the
Super Tucano contract was an embarrassment for the Air Force,
which has struggled with acquisition problems over the last
decade. Schwartz said "there would be hell to pay" if the
documentation problem was not an innocent mistake.
The United States, which has soldiers in Afghanistan along
with other Nato nations, is handling the procurement agreement
for the Afghan Air Force.
The cancellation of the Super Tucano contract is one of
several Embraer has faced involving the United States over the
last 20 years. In the 1990s, the Super Tucano and Embraer in
partnership with U.S.-based Northrop Grumman lost out as
the joint fighter training aircraft for Nato after heavy
lobbying from U.S. competitors.
While the Super Tucano is driven by a propeller, that prop
is driven by a gasoline turbine rather than pistons driven by an
internal combustion engine. As a result, its performance is
similar to that of a jet aircraft and is considered a good
trainer for jet pilots.
Embraer sells about two-thirds of its aircraft, including
regional passenger jets and executive aircraft, in the United
States and gets about two-thirds of its engines and other parts
from U.S. suppliers, Burns said.