Swiss Delay F-5 Replacement By 6-months

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UPDATE 2-Swiss delay jet buy until 2010 after tax spat
By Andrew Thompson ZURICH, March 25 (Reuters) - Switzerland confirmed on Wednesday it would delay until at least 2010 a decision on buying new fighter jets -- a move seen by media as a reprisal against Germany for its campaign against Swiss bank secrecy.

The project, worth 2.2 billion Swiss francs ($1.96 billion), had been unpopular in Switzerland from the start and the ongoing financial crisis is encouraging governments to rein in spending, casting doubts on the future of the purchase.

The Ministry of Defence, headed by nationalist politician Ueli Meurer, said in a statement the ministry would first draft a report on the country's defence policy, due out in December 2009, and then decide on whether it needed new planes.

'The decision will be delayed by at least six months,' said a defence ministry spokesman.

German, French and Swedish factories are competing for the lucrative fighter order.

Germany suspects thousands of its citizens are hiding money in tax havens such as Switzerland, the world's biggest offshore centre where about a third of all global wealth kept abroad is deposited, or around an estimated $2.2 trillion.

Tensions between German and its smaller southern neighbour reached fever pitch last week when a Swiss member of parliament compared German Finance Miniser Peer Steinbrueck to the Nazis and the German minister said he had received threatening letters from Switzerland.

Maurer briefly ditched his German-made ministerial car in recent days to protest against Berlin's campaign to force Switzerland to relax bank secrecy, and his right-wing Swiss People's Party (SVP) wants more retaliation.

The Tagesanzeiger newspaper reported earlier this week that Maurer could delay the fighter project due to French and German attacks on Swiss bank secrecy, in particular comments from Steinbrueck, who has compared the Swiss to 'Indians' running scared from the cavalry.

Swiss President and Finance Minister Hans-Rudolf Merz denied the decision had anything to do with the tax spat, according to Swiss news agency SDA.


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Switzerland aims to replace ageing Northrop F-5E/F Tigers, purchased in 1976 and 1981, with up to 33 new aircraft.

Boeing (NYSE: BA - news) pulled out of the bidding last year.

That leaves 3 jets in the race -- the Anglo-German-Italian Eurofighter, built by EADS (Paris: NL0000235190 - news) with BAE Systems (LSE: BA.L - news) and Finmeccanica (Milan: FNC.MI - news) , France's Rafale, for which Dassault Aviation (Paris: FR0000121725 - news) urgently seeks a first export buyer, and the JAS 39 Gripen, built by Sweden's Saab (Stockholm: SAABB.ST - news) .

If selected, the Eurofighters would be built in Germany.

The delay is the second setback for the western European arms industry in as many days after India was reported by both EADS and Finmeccanica on Tuesday to have cancelled a $1 billion tender to supply anti-armour attack helicopters.

Saab said it took note of the Swiss government's decision.

The SVP, Switzerland's biggest party, said it would support delaying the Swiss jet project and called for further retaliation in the banking secrecy row with Germany. Some party members have called for a Swiss boycott of German cars.

Maurer is the only SVP minister in the seven-member Swiss government which is made up of the biggest four parties and rules by consensus.

The SVP's populist policies have shaken up Swiss politics.

(Reporting by Andrew Thompson; writing by Lisa Jucca; editing by Tim Hepher)