White House Supports Boeing-Brazil Defense Deal

The White House is supporting Brazil’s defense deal with Boeing Co. (NYSE:BA) after Vice President Joe Biden paid a visit to Brazil’s president Dilma Rousseff to assure her that the deal with Boeing would most likely go through.

Biden reportedly told Rousseff that Congress would approve a deal to transfer sensitive technology to Brazil as the country looks to update its aging defense fleet with Boeing’s F-18 planes. The Brazilian military has said that upkeep on the country’s fleet of aging Mirage jets will become expensive this year. The defense deal will include a $4 billion order for 36 jets, with probable follow-up orders.

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As the U.S. and many European countries cut back on military spending, this Brazilian defense deal is highly coveted business for makers of military aircraft. Brazil is also considering deals with France’s Dassault Aviation SA and Sweden’s Saab SA, although after Biden’s visit, it looks as though Boeing will likely be the winner.

Rousseff had previously been worried about the possibility of the U.S. Congress blocking technology transfers due to national security concerns. Brazil has overall good relations with the U.S., but has angered some in regards to its interactions with Venezuela and Iran.

Biden, who has over 30 years of Senate experience, addressed Rousseff’s uncertainties, saying that Democrats probably wouldn’t oppose President Obama on strategic defense sales, and that Republicans would probably take a lead from Arizona Senator John McCain, who is in favor of the deal. He also said that Congress typically only blocks defense sales in strategically difficult parts of the world, like the Middle East, and not overwhelmingly peaceful, democratic areas like South America.

A White House official commented on that matter, saying, “We aren’t going to comment on private conversations, but in general the United States strongly supports Boeing’s bid.”

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Brazil has looked into replacing its military jets before, but a deal has yet to go through. Despite competition from European aircraft makers, there are several reasons to believe Rousseff will go with Boeing, and announce that decision soon. Brazil is going through an economic rough spell, and so it will be most advantageous for Rousseff to announce the decision to spend billions of dollars on military jets before 2014, when she’s up for re-election. In addition to the Brazilian military’s concerns about maintaining its current fleet, Rousseff also believes the deal will be important to Brazil’s strategic alignment for years to come.

Rousseff has looked to strengthen Brazil’s ties with the U.S. during her time as president. She has accepted an invitation for a state visit from President Obama, which will be the first made by a Brazilian leader in 20 years. A deal with Boeing would support her efforts to strengthen relations between the U.S. and Brazil.

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