June 26, 2007 / 6:17 PM / 13 years ago

Austria, Eurofighter agree jet order cut -ministry

(Repeats with new Reuters story code)

By Mark Heinrich

VIENNA, June 26 (Reuters) - Austria and an EADS-led EAD.PA group have agreed a cut in a 2 billion euro ($2.7 billion) Eurofighter jet order to 15 aircraft from 18, saving the country some 400 million euros, the government said on Tuesday.

Austria’s purchase in 2002 of the Eurofighter jets approved by the then-conservative government turned controversial after a parliamentary investigation into the deal launched last year unearthed suspicious payments.

A Defence Ministry spokesman reported the deal a day after a an independent legal expert said proposals by the Social Democratic-led government to cancel the deal entirely would expose Austria to punishingly high costs.

Defence Minister Norbert Darabos reached a settlement with Eurofighter this week under which it would take delivery of 15 instead of 18 jets, ministry spokesman Stefan Hirsch said.

“That corresponds to a saving of around 400 million euros to the taxpayer. The minister will present the agreement to the cabinet on Wednesday,” he said.

Darabos did not require the approval of the co-governing conservative People’s Party for the accord but he would do his utmost to get it, Hirsch added, in the interest of unity in a sometimes fractious coalition formed five months ago.

The parliamentary inquiry exposed payments by a Eurofighter lobbyist to a family member of an Austrian general overseeing the deal. The general was suspended.

Darabos, a Social Democrat, relaunched negotiations with Eurofighter in early 2007.

Eurofighter, owned by EADS, BAE Systems BA.L and Finmeccanica SIFI.MI, said it did not violate anti-bribery rules and had observed the purchase contract’s code of conduct.

Initially, Social Democratic Chancellor Alfred Gusenbauer’s government wanted to call off the deal, although the conservatives supported the purchase.

Darabos said on Monday he could still guarantee Austria’s airspace was safe even with a lower number of jets to control it. As a neutral country, its main task is to monitor suspicious flight movements by foreign aircraft.

((Editing by David Holmes; Vienna Newsroom +43 1 531 12 276)) Keywords: AUSTRIA EUROFIGHTER/

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