Brazil Developing Unmanned Aircraft With Israeli Defense Firm

Brazilian and Israeli military contractors are collaborating on the development of an unmanned aircraft program for Brazil as South America’s largest and most populous nation prepares to host the 2014 World Cup and 2016 Olympic Games.

The unmanned aircraft will be used “to carry out reconnaissance missions, target acquisition, support for firing direction, damages evaluation and land and sea surveillance,” according to a statement from Israeli defense firm Elbit Systems (NASDAQ:ESLT), whose Brazilian subsidiary AEL Sistemas is involved in the Unmanned Aircraft Systems project.

AEL is collaborating with two other Brazilian firms, Embraer Defesa e Segurança, a unit of Embraer SA (NYSE:ERJ), and Avibras Divisao Aerea e Naval, in a joint venture known as Harpia Sistemas, which is developing the UAS project.

The project will provide the Brazilian armed forces with its first set of unmanned aircraft as the government increases its security infrastructure in preparation for the World Cup and Olympics, as well as expanding its anti-drug trafficking operations along its nearly 10,500-mile border with 10 other countries in South America.

Elbit has developed UAS for the Israel Defense Forces and the U.S. military, among others.

On Wednesday Elbit Systems announced that AEL and Embraer signed an agreement for Avibras Divisao to become a shareholder of Harpia.

"Avibras brings to Harpia the best of the know-how that has been developed autonomously in Brazil for UAS to date, making Harpia, [which] already benefits from the extensive capabilities of Embraer Defesa and AEL, a company with all necessary elements for the success of the development in Brazil of latest generation UAS to meet the needs of our country," said Shlomo Erez, director general of AEL, in a statement.

Under the agreement, Avibras will take a 9 percent stake in the joint venture, AEL will hold 40 percent and Embraer will be the major shareholder with 51 percent.