Argentina

Brazilian-Swedish Gripen secures future fighters and economy

Saab and the Brazilian Airforce sign the $5.4 billion contract. Photo by Brazilian Airforce.

Saab and the Brazilian Airforce sign the $5.4 billion contract. Photo by the Brazilian Airforce.

Hours after President Dilma Rousseff was reelected in Brazil, Saab announced that the $5.4 billion contract for selling 36 Gripen NG fighters to the Brazilian Air Force has been signed. It is currently one of the most valuable defense contracts negotiated in an emerging market. The conclusion of the deal is a turn point for Brazilian industry, Saab and for the new Swedish Prime Minister Stefan Löfven.

After a week of strengthening due to the suspected submarine, the Saab stock now continues rising due to the closing of the contract with Brazil. Since the suspected submarine was first spotted October 17th until today when the Brazilian contract was confirmed, the stock has increased with 10 percent.

The contract requires that 80 percent of the Gripen fighters are constructed on Brazilian soil. Igniting the aerospace industry is exactly what President Dilma needs in a Brazil where increasing inflation, stagnation and diminishing investments are a fact.

Brazil joins Sweden in becoming the launch customer for the next-generation Gripen. Photo by Saab.

Brazil joins Sweden in becoming the launch customer for the next-generation Gripen. Photo by Saab.

Collateral deals and thousands of jobs

“We will transfer technology and the capacity to project and construct fighters” Håkan Buskhe, President of Saab affirms. The Brazilian company Embraer will lead the local fabrication of the planes but other Brazilian companies will also participate, such as AEL, Akaer, Atech and SBTA. The development and production of Gripen NG will generate thousands of employments directly and indirectly in Brazil.

“This will be a leap, not only for Embraer, but for our industry as a whole”, declares Lieutenant General Alvani Adão da Silva, Director of the Department of Science and Aerospacial Technology in Brazil. The Southern American giant will participate in the development of the Gripen NG and will be responsible of the version for two pilots. The Brazilian contract includes 28 single-seat and 8 two-seat Gripen NG.

The Gripen fighters are to be delivered between 2019 and 2024. This also implies that Brazil will need to rent older Gripen C/D jets from the Swedish Armed Forces before the delivery date to cover defense needs, such as the 2016 Olympics in Rio de Janeiro. Brazil’s Mirage 2000 jets were retired in December of 2013 and currently the even older F-5EM are being used.

Impact in Sweden

This deal is of importance to the country of Sweden that recently declared that it will buy 60 new Saab Gripen jets. With the Brazilian contract the costs for developing the plane will drop since they will be split between the two countries.

“The real financial winner in this case is Sweden. Saab, of course, as well but primarily Sweden and the Swedish Defense. I cannot say exactly how much money the Swedish state will earn with the deal because of secrecy of the contract. However, I can say that it’s a considerable amount of money due to the division of costs and development”, says Saab’s President Håkan Buskhe.

I have personally, in confidential discussions with another Swedish Minister, been made aware that there are plans of broadening the Brazilian-Swedish collaboration. These intentions involve other areas of cooperation than the industry market. The aim is to increase a cultural and social interchange, beyond the commercial relation.

Sweden’s new Lula

Sweden and Brazil have a long history of successful industrial cooperation and history might just intensify the cooperation in the future. The new Swedish Prime Minister Stefen Löfven is an old friend of the creator of the Brazilian Worker’s Party, ex-President Luiz Inacio Lula da Silva. Both were welders before becoming active labor unionists and after years of struggle both reached the posts as Presidents of the Steel Worker’s Union in their respective countries. During a visit to Sweden Lula even slept at Löfven’s couch.

Swedish Prime Minister Stefan Löfven and Brazil's ex-President Luiz Inácio Lula da Silva. Photos by Mattias Vespä and Ricardo Stuckert.

Swedish Prime Minister Stefan Löfven and Brazil’s ex-President Luiz Inácio Lula da Silva. Photos by Mattias Vespä and Ricardo Stuckert.

“We cannot live on conflict, we have to try to find solutions as well. Going about and fighting others is not my thing.” Comments as such have so far established Löfven as a “nice” politician, unable to beat his rival to the post as Prime Minister, Fredrik Reinfeldt, in debates before the elections. On the other hand he stirred up quite a conflict declaring that Sweden will recognize Palestine as a state.

Löfven is now the leader of one of the weakest minority governments in Swedish history with merely 40 percent of the seats in the parliament. Therefore it would be wise to take this opportunity and develop a strong collaboration with Brazil, built on former contacts and cooperation. With the right media strategy Löfven could become an equivalent to Lula in Sweden, maybe not the sharpest politician but by building strategic business alliances the economy will grow and the people’s love will flourish as a consequence.

The future of Swedish fighters secured

Buskhe has not commented the fact that Brazil and Argentina have signed a contract where Argentina says it intends to buy Gripen from Brazil. However, with the Brazilians buying Gripen the fighter’s future is secured until 2050.

Regardless of Argentina’s next move, the Brazilian deal increases the possibilities of further exports. The competition on the fighter market is heavy but Saab is now certain that it will continue in the fight of developing next generation’s fighters.

 

 

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Argentina wants 24 Gripen NG “USAN”

Gripen test platform NG with new droptanks . Photo by Stefan Kalm/ Saab.

Gripen test platform NG with new droptanks . Photo by Stefan Kalm/ Saab.

Days away from the second round of the Brazilian Presidential elections the government manages to sign an aerospace industrial co-operation agreement with Argentina. This includes the intention of the southern neighbors to buy 24 Saab Gripen NG fighters. That is to say the Gripen that is to be produced to 80 percent on Brazilian soil. This raises the dilemma if increased sharing can lead to boosted vending and occupation.

The contract for the Brazilian acquisition of 36 Gripen NG is to be signed by December and one of the main reasons that Brazil chose the Swedish fighter is the almost total transference of technology. In return, the South American giant spoke of great expansion possibilities for Saab on both the Latin American market as well as other allied nations, such as the other BRICS-countries. Accordingly, Argentina might just be the first in line to a large-scale expansion, or perhaps inclusion.

The reason that the Defense Ministers had gotten together on Tuesday (October, 21st) in the interior of the state of São Paulo was to celebrate the launch of the cargo plane KC-390. The aircraft was projected by the Brazilian Armed Forces and produced by the national aeronautics company Embraer in cooperation with Argentina, Portugal and the Czech Republic.

 

The Defense Ministers of Argentina and Brazil, Agustín Rossi and Celso Amorim, signing the agreement of expansion of joint projects in the aeronautical sector.

The Defense Ministers of Argentina and Brazil, Agustín Rossi and Celso Amorim, signing the agreement of expansion of joint projects in the aeronautical sector.

“The investments made to produce the KC-390 pieces in the Argentinian factory in Córdoba were fundamental to revitalize the aeronautics industry in our country”, the Argentinian Defense minister Agustín Rossi declared at the event.

Hopes of shared production

In the press release that the Brazilian government issued it is stated that ”the conditions for the acquisition, as well as the possible Argentinian participation of the production of these planes, will be detailed during the following months, between representatives from both countries.”

The expectations in Argentina have sky rocketed with the news. Having an updated aerospace industry and a successful collaboration with Brazil in a moment of deep economic crisis creates hope. Both in media and aerospace industrial forums online Argentinians are discussing how this might be the beginning of a Gripen NG “USAN” (The Union of South American Nations/ Spanish: Unión de Naciones Suramericanas, UNASUR) where not only Brazil and Argentina might be co-producers in developing Saab’s fighter, but maybe even more of the sister nations around the continent.

On the other hand, it was quite a large leap for the Swedish Defense and Security company Saab to agree to the technology transfer demanded by Brazil. “Perhaps the technology can be considered “open” with the contract that is to be signed and therefore it might be eligible to spread. However, I do not believe that the transfer will continue over to Argentina. The Swedish and Brazilian Alliance should be sufficient to simply sell the fighters to third-party buyers” according to Oscar Jansson PhD-Candidate at the Department of War Studies, King’s College London, in an interview with Cecilia Vaccari.

Political advantages

The Brazilian Defense Minister, Celso Amorim underlined that “These last 12 years with Luiz Inácio “Lula” da Silva and Néstor Kirchner as Presidents, and later Dilma Rousseff and Cristina Fernández de Kirchner, have been the most fruitful in the bilateral relationship.”

Undoubtedly, the agreement between the two countries implies in expanded industries, work for the people as well as appropriation and exchange of new technology. As a bonus it might just give President Dilma Rousseff the lift she needs to defeat her rival in the elections on Sunday (October 26th). In light of the bad finances in the country she needs to prove to the Brazilians that she can in fact offer a bright future. Maybe it will even save President Kirchner from her all time low popularity figures before it is time for the Argentinian elections in a year from now. But if both strike out and the plans are dropped, they will without a doubt take the Saab stock with them in the plunge.

 

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