Brazil Signs Landmark Arms Deal with France

**xinhui** · 25 Dec 08,, 21:59

Global Insight

December 24, 2008

Brazil Signs Landmark Arms Deal with France

Juliette Kerr

Brazil is to acquire French military equipment and technology, worth some $12US billion, highlighting its aspirations to be recognised as an emerging regional and global leader.

Dreaming of a Nuclear Submarine

Following their meeting within the framework of the European Union (EU)-Brazil talks earlier this week, French president Nicolas Sarkozy and his Brazilian counterpart Luiz Inacio Lula da Silva yesterday signed a landmark $12US-billion arms deal, the first tangible outcome of the declared strategic alliance between the countries (seeBrazil: 13 February 2008

. Under the deal, France will sell Brazil four conventional Scorpene submarines and 50 EC-725 helicopters, but assembly of submarines and helicopters will be done locally. Brazilian companies, including Odebrecht, will work together with the French Direction des Constructions Navales Services (DCNS) to build a shipyard in Rio de Janeiro where the submarines will be assembled. The helicopters will be assembled by Helibras, the Brazilian subsidiary of the EADS-owned Eurocopter, with first deliveries scheduled for 2010. French technology will bring Brazil also closer to realising its old dream of becoming the first Latin American country to operate a nuclear submarine. Under the deal, DCNS will deliver the non-nuclear technology, while Brazil remains responsible for the nuclear parts of the project, including a planned $880US-million nuclear reactor.

Global Insight Perspective

Significance

Following the long-awaited publication of a new military strategy last week, Brazil yesterday concluded a deal with France on purchasing army equipment, including transport helicopters, submarines and technology for building a nuclear submarine

Implications

While facing no traditional military threat, Brazils pledges to modernise its armed forces and to strengthen the domestic weapons industry. Its stronger military muscle underlines once again growing self-assertiveness and leadership aspirations

Outlook

Steeply rising military spending in some Latin American countries, including Brazil , Chile and Venezuela , have caused some worries over a potential Latin American arms race, but the modernisation of armed forces is critical for the achievement of a range of governance goals.

The arms deal comes against the backdrop of last week's presentation of Brazil 's long-awaited new National Defence Strategy, broadly aimed at modernising the country's armed forces. The strategy sets out guidelines to better align the organisation of the Navy, the Air Force and the Army with the tasks of the different forces, in particular the improved protection of the country's vast territory and its natural resources. The second key theme of the document is the broader goal to strengthen the domestic arms industry so as to end the reliance on foreign weapon and defence systems. Controversially, the strategy reaffirms the obligatory military service. While current practices of drawing recruits are widely seen as unfair, the strategy insists on maintaining military service, seen as an important means of forging national unity.

A Latin American Arms Race?

On the face of it, the alliance between Brazil and France jumps on the bandwagon of a similar alliance between Venezuela and Russia --even if the relationship between Venezuela and Russia has never been an exclusive one, with Russia also having talked to Brazil over arms. However, over the last years, Venezuela has become a heavy buyer of Russian military equipment, including Sukhoi jet fighters helicopters and 100,000 Kalashnikov rifles. Only last month, the Caribbean Sea saw joint Venezuelan and Russian navy exercises. Venezuela 's rearmament drive has raised concerns in Colombia , as relations between the neighbours have increasingly turned sour. Venezuela 's total spending on arms is estimated at some $900US million in 2008, while Brazil has pledged to augment spending on military equipment by a full 50% over 2008-11.

While these developments smack somewhat of a budding arms race, stronger military spending has also been helped by external circumstances, in particular booming commodity prices and a weak U.S. dollar. This holds true for Venezuela and Brazil , but particularly for Chile , another big spender, where a law diverts 10% of the export revenues of the state-owned copper giant Coldelco to the army. Rising military spending in many Latin American countries also follows a period of relative neglect of the armed forces, in the wake of the region's return to democracy since the 1980s. This is the case in Brazil , for instance, where current higher spending was preceded by a freeze in military expenditure. Finally, there are some important countries, such as Argentina, with an estimated military spending of some 1.3 % of GDP, that show no signs of being engaged in an escalating arms race and there is little visible evidence that increased military spending has been crowding out social spending, which is burgeoning throughout the region.

Outlook and Implications

As Brazil faces no traditional military threats, the arms deal and the new strategy document highlight once again Brazil's growing self-assertiveness and underpin its aspiration for assuming regional and, potentially, global leadership. Nonetheless, domestic effects are as important. In particular the technology transfer parts of the deal can be expected to benefit the domestic arms industry. While remaining non-nuclear, the accord also supports the expansion of Brazil 's nuclear power generating capacity. The geopolitical edge of the Lula government, however, has not been without internal debate, as there are discussions about the military necessity of the costly submarine project. The broader worry over the recent rise in military spending is that conflicts between countries could eventually turn violent. This is not a concern for Brazil as the country has no unresolved border disputes, and the last time it was engaged in military combat on South American soil was the Chaco war in the 1930s. Nonetheless, some of the recent regional spats, especially involving Colombia and its neighbours Venezuela and Ecuador , also implicated military forces. Even here, however, there is little sign that these conflicts could really lead to military escalation. Intra-regional co-ordination and conflict resolution schemes, especially through the Union of South American Nations (UNASUR), have already proven relatively efficient. More broadly, countries also appear more likely to resort to international bodies to resolve pending disputes, for instance over territory. Encouragingly, during the recent summit of Latin American and Caribbean leaders celebrated in Brazil, UNASUR could finally agree on the creation of a Latin American Defence Council (seeLatin America 18 December 2008

.

While some of the recent military purchases may indeed cause worries, there is no dearth of sensible military tasks in the region, ranging from tougher border protection--needed to tackle drug trafficking more effectively--to disaster relief and engagement in international peacekeeping missions. Unaccountable, poorly trained, and ill-equipped armed forces can easily turn into a major stumbling block for delivering on these tasks. Insistence on flagship projects combined with a tougher macroeconomic environment and tighter fiscal situation in the majority of the countries might, however, distract political attention in the future from pursuing the necessary reforms.

**xinhui** · 25 Dec 08,, 22:05

http://www.defense-aerospace.com/cgi...se&prod=100931

Brazilian Navy Signs Contract for Submarines

(Source: Brazilian Navy; issued Dec. 23, 2008)

(Issued in Portuguese only; unofficial translation by defense-aerospace.com)

As part of a strategic partnership between Brazil and France, contracts were signed today covering, on the one hand, the acquisition and construction in Brazil of four Scorpene conventionally-powered submarines and, on the other hand, the development and the construction of a single nuclear-powered submarine.

All of the nuclear power plant will be developed exclusively by Brazil .

For the implementation of these two projects, it is contractually foreseen that all necessary technology transfer, not only to the naval architects and designers, but also various Brazilian companies who will take part in the process as a high degree of national content is planned for the submarines.

More than 30 Brazilian companies are already involved, and will supply over 36,000 items, including complex

The design and construction of a dedicated shipyard for the nuclear submarines, meeting all accepted technological, environmental and quality control standards, is also covered by the agreements. The shipyard will also be able to produce conventional submarines.

A new naval base to support these submarines will be built next to the shipyard.

The Brazilian Navy considers that the biggest benefits for the nation will be, beyond the goods and know-how generated by this contract, the high degree of technology transfer, the increased level of national content, and the considerable number f qualified jobs that will be created. When added to the number of civil engineering jobs for the construction of the shipyard and the submarine base, the submarine project will generated over 2,000 direct and 6,000 indirect jobs.

(EDITOR’S NOTE: According to Brazilian Defense Minister Nelson Jobim, quoted by tbe Brazilian media, the Rio shipyard will be built and operated by French private-sector companies for 20 years, after which it will revert to Brazilian ownership.

In addition to the four Scorpene diesel-electric submarines, the French-operated yard will build a fifth boat which will be fitted with a Brazilian-designed nuclear power-plant. France is not involved in this aspect of the program, Joabim said; he added that the future nuclear submarine base will be operational in two decades.)

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DCNS Wins A Major Contract in Brazil

(Source: DCNS; issued Dec. 23, 2008)

DCNS has been awarded a major contract by the Brazilian Navy. The customer has entrusted DCNS with the design and construction of four conventional-propulsion submarines under a technology transfer agreement, [and] the technical assistance for the design and construction of the non-nuclear part of the first Brazilian nuclear-powered submarine, and the support services for the construction of a naval base and a shipyard in Brazil .

Regarding the nuclear submarine, the technical assistance provided by DCNS will be related to the non-nuclear part of the submarine, the Brazilian Navy being fully responsible for the nuclear plant.

The contract is part of a vast plan to renew and modernise the Brazilian Navy’s submarine fleet. It is also in line with the strategic cooperation agreement in defence signed in Rio de Janeiro today by Brazilian President Luiz Inácio Lula da Silva and French President Nicolas Sarkozy. The contract will come into force following a comprehensive approval process in Brazil .

DCNS Chairman & CEO Jean-Marie Poimbœuf commented: “We welcome the decision by Brazil ’s highest authorities in favour of DCNS and our Brazilian partner, the Odebrecht Group. This success confirms our capabilities as an overall prime contractor, as well as our technological and competitive standing on the international market. It also confirms our ability to establish partnerships to handle in-country project work, just as we have done in other countries around the world.”

DCNS will act as prime contractor for four conventional-propulsion submarines to be built by the Joint Venture that will be set up by DCNS and Brazilian partner Odebrecht. The submarines will be designed in cooperation with Brazilian teams under DCNS design authority to meet the Brazilian Navy’s specific needs: They will be ideally suited to the protection and defence of the country’s 8,500-kilometre coast. The first submarine is scheduled to enter active service in 2015. DCNS will produce key advanced-technology equipment in its own plants.

DCNS will provide design assistance – under the Brazilian Navy’s design authority - for the non-nuclear part of the Navy’s first nuclear submarine, which will be built by the Joint Venture to be set up by DCNS and Odebrecht.

DCNS will provide prime contractor assistance to Odebrecht for the construction of the naval shipyard that will build the five submarines covered by today’s contract, as well as a naval base for the Brazilian Navy.

The submarines proposed by DCNS combine advanced technologies, competitive pricing and optimal cost of ownership, and can be tailored to meet a full spectrum of operational naval needs. The designs for the Brazilian Navy will combine advanced technologies with innovations developed for other programmes, particularly with regard to hydrodynamics, acoustic discretion, automation and combat systems.

These submarines can be tailored to undertake all types of anti-surface and anti-submarine warfare missions, as well as special operations and intelligence gathering.

The DCNS Group is one of Europe ’s leading players on the world market for naval defence systems. To meet customer demands for more comprehensive and integrated systems, DCNS acts as prime contractor for naval shipbuilding, integration and support by combining its own development, marketing and production capabilities with those of selected partners. To manage the complexity of such projects, the Group draws on in-house expertise in naval architecture and systems engineering, ship assembly and integration and equipment design and production, as well as through-life support. The DCNS Group employs 13,000 people and generates annual revenues of around EUR 2.8 billion.

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**xinhui** · 25 Dec 08,, 22:16

http://www.defense-aerospace.com/cgi...se&prod=100932

Commander of the Air Force Signs Unprecedented Contract with France

(Source: Brazilian Air Force; issued Dec. 22, 2008)

(Issued in Portuguese only; unofficial translation by defense-aerospace.com)

With 50 on order, Brazil will become the world’s largest operator of the Eurocopter EC725, seen here in French combat SAR service. (Eurocopter photo)The Commander of the Air Force, Lieutenant-General Juniti Saito, representing the three Armed Forces, will sign, today Dec. 23 in the Hotel Copacabana Palace , in Rio De Janeiro , a contract for the production in Brazil and the supply of 50 EC-725 military helicopters.

This project calls for 16 helicopters for the Brazilian Navy, 16 for the Brazilian Army and 18 for the Air Force. It will be signed with the chief executives of Helibras Brazil Helicopter Company and Eurocopter, respectively Jean-Noël Hardy and Mr. Lutz Bertling.

The contract, fruit of the long-standing aeronautical cooperation between Brazil and France , aims at consolidating and extending exchanges in the military field, and at stimulating industrial and commercial activities between the two countries.

Significantly, the agreement calls for the manufacture of the aircraft in Brazil , by Helibras and other joint venture companies, thanks to technology transfer and direct offsets.

The contract is the result of the operational requirements of the three services, and calls for the implementation of engineering projects, manufacture, modification and modernization of helicopters, as well as qualification of staff, in Brazil .

The signature of this contract with EADS is unprecedented, as it represents the first instance of a joint project by the three armed forces for the procurement of military equipment.

Delivery of the first production aircraft is scheduled for the end of 2010.

(EDITOR’S NOTE: According to official statements reported by the Brazilian media, the contract is valued at 1.89 billion euros and payments will continue until 2026. The helicopters will be built by Helibras at its Itajuba factory, in Minas Gerais state, while their turboshafts will be built at Turboméca’s facility in Rio de Janeiro . A substantial part of the avionics will be built in Brazil .)

(ends)

Eurocopter and Helibras Sign a Historic Contract with the Brazilian Government

(Source: Eurocopter; issued Dec. 23, 2008)

RIO DE JANEIRO, Brazil --- Following the EU-Brazil summit, President Nicolas Sarkozy of France and President Luiz Inácio Lula da Silva of Brazil officially announced the contract for 50 EC725 helicopters which has been signed by the Brazilian government and a consortium formed by Eurocopter and Helibras.

The helicopters will be operated by Brazil ’s armed forces and the first deliveries are scheduled for 2010.

This is the largest contract ever signed in South America and will provide Brazil with a fleet that is capable of performing an extremely wide range of missions. The contract will also allow Eurocopter to continue its expansion in South America .

“This is an important achievement for Eurocopter, Helibras and the Brazilian government,” announced Eurocopter President Lutz Bertling. “This contract is the result of the close industrial partnership and the long-standing relationship that we have with Brazil , and we are particularly proud that the EC725s will be produced in this country. This contract heralds a new era for Helibras, which will become an outstanding center of aeronautical excellence in South America .”

Louis Gallois, CEO of EADS, Eurocopter’s mother company, added:”EADS considers Brazil as a priority country in its long term partnership strategy. Our group has been developing its different activities there for many years: Airbus, ATR, military transport aircraft, space and security equipments. This major contract is fully in line with our strategy”.

This historic contract is part of the joint declaration on defense cooperation signed by the French and Brazilian defense secretaries on June 30, 2008 – a date which also marked the 30th anniversary of Helibras.

Eurocopter has been in Brazil for more than 30 years through its subsidiary Helibras located in Itajuba in the state of Minas Gerais. Helibras employs 270 people and is the only helicopter manufacturer with an established presence in South America . In 30 years, Helibras has delivered almost 500 aircraft, becoming the leader in the Brazilian market.

The new contract will double the production capacity and the number of staff at the Itajuba plant, where the EC725 helicopters will be manufactured, assembled and undergo maintenance support activities after delivery.

This contract will also make a significant contribution to the development of Brazil ’s aeronautical industry, as local companies will be closely involved in the manufacturing activities and will benefit from technology transfers.

Eurocopter’s subsidiary has a 50% share of the civil market, a 67% share of the military market, and a 80% share of the parapublic market in Brazil . In addition to its production and export activities in Latin America , Helibras also carries out customization, maintenance and technical support work on Eurocopter aircraft. As many as 8,000 pilots and technicians have already been trained in its training center.

The EC725 is the latest addition to the Cougar family. Prior to the signing of this contract, 96 EC725 and EC225 helicopters (its civil version) had been ordered by 17 different countries. The EC725 is a twin-engine helicopter with a five-bladed main rotor in the medium-lift category (11 metric tons). The aircraft has an exceptional fuel capacity and boasts a flight endurance of five-and-a-half hours. The EC725 has been designed to perform various missions, including combat search and rescue, long distance tactical transport, emergency medical services, logistics support, and naval assignments. It was this multi-role capability that made the EC725 the logical choice for the Brazilian armed forces.

Established in 1992, the Franco-German-Spanish Eurocopter Group is a Division of EADS, a world leader in aerospace, defence and related services. The Eurocopter Group employs approx. 14,000 people. In 2007, Eurocopter confirmed its position as the world’s No. 1 helicopter manufacturer in the civil and parapublic market, with a turnover exceeding 4 billion Euros, orders for 802 new helicopters, and a 53 percent market share in the civil and parapublic sectors. More than 10,000 Eurocopter helicopters are currently in service with over 2,800 customers in 140 countries. Eurocopter offers the largest civil and military helicopter range in the world.

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**kuku** · 26 Dec 08,, 08:58

And the French submarine sales keep on increasing.

the sweet smell of multi million dollars o la la.....

Why no Rafales in the package deal, it was the perfect opportunity.

**Tarek Morgen** · 26 Dec 08,, 09:09

the decision for the FX-2 programm is expected for the first quarter of 09, but I would not be surprised if they delay it. Buying new combat aircrafts is a rather expensive thing and they might want not spend that kind of money right now. Still in the race are, afaik, the Super Hornet, the Gripen and the Rafale.

My guess they pick the last one, except there is intervention from "above" (politics)