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Senate block on Brazil envoy may cost Boeing $7.5 bil
Bloomberg News
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Published: 11/19/2009 12:02 AM

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A four-month delay by the U.S. Senate in confirming President Barack Obama's nominee for ambassador to Brazil may cost Boeing Co. a $7.5 billion jet fighter contract, a former top U.S. diplomat to Latin America said.

Bernard Aronson is one of nine ex-Assistant Secretaries of State for the Western Hemisphere who today sent a letter urging Senator George LeMieux, a Florida Republican, to stop blocking a vote on career diplomat Thomas Shannon's nomination. Aronson said the delay may help France's Dassault Aviation SA beat Boeing in the competition to sell Brazil 36 warplanes.

"This will cost thousands of U.S. jobs," said Aronson, who served as top envoy to the region from 1989 to 1993 for Presidents George H.W. Bush and Bill Clinton. "It's an insult to Brazil to tell them they're not important enough to have an ambassador like so-called advanced countries but that we want them to buy our planes over the French."

Boeing is working to prevent Dassault from winning a contract that analysts estimate could be valued at as much as 5 billion euros ($7.5 billion). The Chicago-based company delivered its final offer for the F/A-18 Super Hornets in October, after French President Nicolas Sarkozy traveled to Brazil and won a promise from his counterpart, Luiz Inacio Lula da Silva, to open exclusive talks to buy Dassault's Rafale jet.

Today's letter urges LeMieux to stop using Senate rules to prevent a vote on Shannon, saying it "sends a damaging message" to Brazil and all of Latin America. The eight other signatories occupied the post under six presidents since 1976.

Aronson is a co-founder and managing partner of Acon Investments LLC, a Washington-based private equity group that manages $600 million in U.S. and Latin American assets. He confirmed the authenticity of the letter, which was provided by a Senate aide, and that of a similar letter from the nine to Senate Republican leader Mitch McConnell.

The aide, who spoke on condition of anonymity, said LeMieux is stalling a vote on Shannon over Obama's decision to initiate talks with Cuba on migration and direct mail service. Shannon, who became the State Department's top diplomat for Latin America in 2003, left the post this month.

A spokeswoman for LeMieux didn't return a phone call seeking comment. On Nov. 6, when the so-called hold was placed, LeMieux said in an e-mailed statement that he intended to meet with Shannon to discuss his concerns about U.S. policy in the region.

"Boeing acknowledges the great support from State and the local embassy in Brazil during the F-X2 fighter competition," Mike Coggins, who is overseeing the sale for Boeing, said in a e-mailed statement.

Boeing fell 51 cents, or 1 percent, to $52.02 in New York Stock Exchange Composite trading.

Sarkozy won Lula's backing for the Rafale in exchange for a promise to grant Brazil exclusive resale rights in Latin America, build some of the planes locally and buy 10 military transport aircraft from Sao Jose dos Campos-based Empresa Brasileira Aeronautica SA.

Boeing's Integrated Defense Systems has offered to build 24 of the 36 planes in Brazil in partnership with Embraer and transfer technology allowing the company to become a supplier to its civilian aircraft line. Sweden's Saab AB's is a third finalist competing for the deal with its Gripen aircraft.

Michel Merluzeau, an aviation analyst at Seattle-based market research firm G2 Solutions, estimates the eventual contract could be worth 5 billion euros ($7.5 billion).

In the letter, the diplomats bring attention to Brazil's "vital importance" to advancing U.S. interests on issues ranging from trade and investment, immigration, public health, energy, the environment, counter-narcotics, nuclear non- proliferation, and counter-terrorism. Brazil is Latin America's largest economy.

LeMieux's put his hold on the nomination immediately after Senator Jim DeMint, a South Carolina Republican, lifted his own three-month objection on Shannon and his nominated replacement, Arturo Valenzuela.

DeMint said he decided to lift his objections after receiving assurances the U.S. would recognize the outcome of the scheduled Nov. 29 presidential election in Honduras regardless of whether deposed President Manuel Zelaya is reinstated.

Shannon brokered a deal last month in Tegucigalpa between Zelaya and acting President Roberto Micheletti to have the Honduran Congress decide whether to restore Zelaya four months after he was ousted by the military and taken at gunpoint to Costa Rica.

Zelaya has said the accord unraveled after Congress delayed a vote on his restoration. Congress decided yesterday it won't vote on the issue until after elections, legislator Antonio Rivera said today in a phone interview.

In August, Florida Governor Charlie Crist chose LeMieux, his former chief of staff, to serve out the U.S. Senate term of Republican Mel Martinez, who resigned.

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