Saab's Brazil Gripen bid delayed further

Brazil will make no decision in the "short term" on a multi-billion-dollar tender for 36 new fighter jets that is closely fought over by US, French and Swedish companies, the defence ministry said Tuesday.

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Defence Minister Nelson Jobim explained to visiting French Foreign Minister Michele Alliot-Marie the added delay was because of government budget cuts about to be implemented, the ministry's media office said.

"This decision will not be made in the short term, over the next few months... because of the 50 billion reais ($30 billion) in budget cuts," a spokesman said.

"But this doesn't mean the end of negotiations. The project continues," he added, explaining that the issue was being handled by President Dilma Rousseff.

Brazil has over the past year repeatedly delayed making a decision on the tender, estimated to be worth between $4 billion and $7 billion, which pits the US F/A-18 Super Hornet by Boeing, France's Rafale by Dassault, and Sweden's Gripen NG by Saab against each other.

Former Brazilian president Luiz Inacio Lula da Silva and French President Nicolas Sarkozy had announced in 2009 that negotiations had started for Brazil to buy the Rafale.

But after an outcry by competitors, and leaked criticism by Brazil's air force, the government backtracked.

Lula had promised to declare a winner before he left power at the end of 2010, but in the end handed the tender over to his successor, Rousseff, who has put off making a choice and shown no preference for any of the jets.

Deciding which jet will form the spearhead of Brazil's air force for the next three decades will signal an important move for the Latin American nation, which is currently using vintage aircraft to patrol the vast Amazon forest and to protect recent offshore oil finds.

But at the same time, worrying signs of inflation and export-debilitating currency movements in a volatile world economy have forced Brasilia to announce the $30 billion in cuts from its budget.

Jobim, who is believed to favor the Rafale because of France's promise to transfer all technology in the deal, has already said there is no money allocated this year to buy the fighter planes.