Supreme Defense Council disputes a €4 bln army contract

The Defense Ministry is to allocate some €4 billion for this program, and CSAT members were to decide whether the purchase of the airplanes, to replace the current MIG-21 Lancers, will be through an international tender or direct negotiations with the producer.

The business advisory companies mediating the deal will charge a fee of up to €100 million, at 0.5-2.2 percent of the contract value.

The deal stirred a new dispute between Prime Minister Calin Popescu Tariceanu and President Traian Basescu, who are at odds due to several issues regarding domestic policies and international affairs. Basescu supports an offer by the U.S. Government, according to which Romania is to receive several F-16 aircraft free-of-charge, provided it purchases the newer F-35 Joint Strike Fighter in ten years time. Tariceanu is more interested in supporting European offers for the JAS-39 Gripen fighter, made by Sweden-based SAAB, or theTyphoon, built by the Eurofighter consortium. The cost of a Gripen plane is €42 million, while the Typhoon goes for €110 mln, albeit better quality. No decision has been made on the issue so far.