Embraer enjoys an arm’s length relationship to the Brazilian government. There is a clause written in the company’s bylaws that gives the government authority at any time, for any reason, veto power over the production and supply of maintenance and replacement parts for military aircraft. This Golden Share provides the Brazilian government with veto power over key policies that would affect Embraer’s defense business.
There is good reason to think carefully about possible expansion of the U.S.-Brazil defense trade relationship. Brazil’s medium and long-term foreign policy orientation is uncertain. The trajectory of recent Brazilian foreign policy suggests that a strong, cohesive, and stable alliance with the United States is unlikely. Moreover, the future relationship between the Brazilian government and its private sector is unclear, unfair, and troubling.
When officials at the Department of Defense decide whether to award an important Air Force contract to a Brazilian firm, they should consider the far reaching U.S. national security implications. They should carefully scrutinize a decision that could strengthen Brazil’s defense industry while weakening U.S. aircraft manufacturers and the economy as a whole.