BRAZIL'S FIGHTER COMPETITION: AMBASSADOR'S

1. (C) In a private June 26 meeting with Ambassador Sobel
on the margins of a lunch including Presidential Advisors
Marco Aurelio Garcia and Gilberto Carvalho, MOD Jobim said he
believes he has the information he needs to discuss Brazil's
fighter purchase with President Lula once the Air Force makes
a recommendation. Jobim told the Ambassador that he expects
to receive the Air Force's position in July, after which he
will be able "to speak politically." Jobim emphasized that
tech transfer would be the key factor in Brazil's decision,
although he declined to be drawn into discussing whether he
thought Boeing's tech transfer offer the best. He did say
that he was convinced Boeing was "sincere" in its offer.
Ambassador Sobel asked whether, in the event that the Air
Force recommended the Super Hornet, Jobim would endorse the
recommendation. The Minister said he had the information he
needed to support the Super Hornet. He cautioned that he
does not currently know "where Lula is" on the matter.



2. (C) Turning to the question of industrial cooperation,
Jobim believed that there was increasing interest in Boeing's
offset package. He reported that he had recently discussed
the issue with Embraer President Frederico Curado who had
said Embraer's priority was job creation and that Curado was
interested in what he described as building partnership with
Boeing. Jobim was also impressed by the breadth of Boeing's
prospective industrial cooperation, encompassing major firms
such as Embraer and Avibras, companies with strong political
connections such as Santo Labs, and even a business in Porto
Allegre, in Jobim's home state of Rio Grande do Sul. Jobim
said he planned to meet with Boeing officials in early July
to learn more about the offset package.



3. (C) Embassy Comment. Embassy believes Jobim's remarks
were intended to convey the sense that Boeing is in a strong
position to come out of the Air Force phase of the selection
process as a front runner. Should it do so, Jobim will
likely be willing to offer his support. The key decision,
however, will be with the National Defense Council, in
particular President Lula. Should Lula prefer one of the
competitors, it is likely Jobim would go along. For this
reason, USG enagement with Brazil at the highest levels
assumes even greater importance as we have a narrowing window
to influence the fianl decision.
SOBEL