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The Financial Times, 28.12.00

Lockheed Martin wins deal. By Mark Mulligan in Santiago

Chile's air force has been given the go-ahead to begin negotiating the purchase of up to 16 F-16 fighters from Lockheed Martin, the US aerospace group, in what will be the largest defence order from Latin America for 20 years.

President Ricardo Lagos on Wednesday approved the $600m acquisition, which has been delayed for more than two years, mainly due to budgetary cuts and the detention of General Augusto Pinochet, the former dictator.

Soured relations between Chile and several European countries over the detention and related extradition warrants for Gen Pinochet complicated defence negotiations, although officials maintained on Wednesday the final decision was based on purely technical considerations.

The purchase is part of the "Caza 2000" programme agreed in 1997 by Eduardo Frei, President Lagos' predecessor, to replace outdated Mirage fighters. The Chilean navy, too, has begun building its own frigates to replace its ageing flotilla.

Lockheed Martin, with the aid of intense lobbying by diplomatic staff in Chile, beat SAAB-Bae, the Swedish-UK joint venture, and Dassault of France, which have been promoting the JAS-39 Gripen and Mirage 2000-5 jets, respectively.

Chilean air force generals have been known to favour the US option for some time, prompting a visit to the country last year by William Cohen, the US secretary of defence, who signed a joint declaration with his Chilean counterpart on a defence-related environmental programme.

The two governments will further discuss co-operation in other defence-related industries as part of the deal.

The visit by Mr Cohen was part of a regional tour that included Brazil and Argentina, where the US is chasing billions of dollars in defence orders after a 20-year ban on advanced weaponry sales to most of Latin America.

The US campaign in Chile was stepped up in March this year, when aerospace and defence representatives turned out in force to the country's bi-annual international air and space fair.

John O'Leary, US ambassador to Chile, on Wednesday welcomed President Lagos' decision, saying it would "further strengthen the close bilateral relations" between the two countries.

The US and Chile recently opened negotiations on a free trade agreement, which embassy sources have indicated could be signed within the next two years.

Ron Covais, regional president for Lockheed Martin, said: "The selection of the F-16 could prove the basis for broadening long-term relations between the governments of Chile and the US, and between their air forces and Lockheed Martin."

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