Sweden can help fund Ukraine's Gripen deal, defence minister says

By Johan Ahlander

STOCKHOLM (Reuters) -Sweden and Ukraine are making progress on financing for a major deal that could include Kyiv buying up to 150 Gripen E fighter jets, Sweden's defence minister told Reuters on Thursday, adding that Stockholm could fund part of the deal via military aid.

Sweden signed a long-term cooperation agreement in October with Ukraine for air defences that includes the possibility of exporting the fourth-generation fighter jets, in what would be Sweden's biggest aircraft order yet.

The cost of the potential deal has not been disclosed but manufacturer Saab sold four Gripen aircraft in the third quarter to Thailand in an order valued at 5.3 billion Swedish crowns ($563 million), raising questions over Ukraine's ability to finance the purchase.

FINANCING OPTIONS

"It (the financing) is moving forward and we're working closely with the Ukrainian side," Pal Jonson said, adding that Ukraine's ability to finance the planes from its budget after the war would be a central part of the deal but that there were other ways as well.

"We can look at export credits, the frozen Russian assets and our framework for Ukraine aid, which is 40 billion crowns next year and 40 billion in 2027," he said.

Jonson said that Sweden had presented the deal to the so-called coalition of the willing, a group of 16 European countries determined to help fund Ukraine's war against Russia, and that some of them might be willing to help fund the planes.

"It could be that countries who have subcomponents in the Gripen system may have extra incentives to help finance the deal," he said.

Gripen is fitted with engines from General Electric, and also many components made in Britain.

Jonson said Sweden was pushing hard in negotiations with other EU countries to use 200 billion euros of frozen Russian assets to fund Ukraine's war effort.

Swedish Prime Minister Ulf Kristersson told Reuters in October that the jet deal with Ukraine was "very realistic" but that a lot of work remained and first deliveries could take place in three years' time.

Saab has said it can ramp up Gripen production to meet demand and that it was considering cooperation with Ukraine, Canada and other countries to add to the production in Sweden and an assembly line in Brazil.

Jonson is hosting his Ukrainian counterpart Denys Shmyhal in Stockholm on Thursday.

Gripen is seen by analysts as a low-cost alternative to more expensive fifth generation warplanes, such as the F-35.

($1 = 9.4155 Swedish crowns)

(Reporting by Johan AhlanderEditing by Mark Potter)