Switzerland in talks with US as cost of F-35A fighter jets rises

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By John Revill and Marleen Kaesebier

ZURICH (Reuters) -Switzerland is holding talks with the United States after Washington tried to raise the price of new fighter jets Bern is buying for its air force, the government said on Wednesday.

Bern chose Lockheed Martin’s F-35A Lightning II as its next-generation fighter plane in 2021, with a fixed price of around 6 billion Swiss francs ($7.4 billion) for 36 jets, a decision that attracted controversy in neutral Switzerland.

But the U.S. Joint Program Office overseeing the project said last year the price could be higher, and the U.S. Defense Security Cooperation Agency told Switzerland in February that the fixed price was a misunderstanding.

Switzerland was informed the price for the F-35s would be dearer because of higher raw materials and energy costs, as well as higher U.S. inflation, with the sum potentially increasing by $650 million to $1.3 billion, the government said.

“A contract is a contract,” said Urs Loher, head of Swiss defence procurement agency Armasuisse. “With the procurement of the F-35A fighter aircraft, we’re suddenly faced with a different reality, despite a clear fixed price.”

As the agreement prevents a legal settlement of the dispute, a diplomatic solution must be sought, the government said.

Defence Minister Martin Pfister said talks were now under way with the U.S. authorities.

“We still believe we’ll find a solution with the U.S. authorities because they also have an interest in being perceived as a reliable contractual partner,” Pfister said, while as a last resort Switzerland could cancel the deal.

The decision to buy the F-35A was contested in Switzerland, with opponents arguing against replacing the country’s aging F/A-18 jets with an unnecessary “Ferrari” option. Critics said Switzerland did not need cutting-edge warplanes to defend its territory, which a supersonic jet can cross in 10 minutes.

The F-35A beat bids from Boeing’s F/A-18 Super Hornet, the Rafale produced by France’s Dassault and the four-nation Eurofighter built by Italy’s Leonardo, Britain’s BAE Systems and Airbus representing Germany and Spain.

Still, Switzerland said it remained committed to the F-35A, and that cancelling the order would have serious consequences.

“Switzerland would no longer be able to guarantee the safety of its airspace and population from 2032, as the current F/A-18 fighter aircraft would reach the end of their service life,” Pfister said.

($1 = 0.8067 Swiss francs)

(Reporting by John Revill. Editing by Aidan Lewis and Mark Potter)