Market Focus : Europeans’ $35-Billion Fighter Jet Is Back on the Runway : Germany reluctantly agrees to continue funding the four-nation project.

The on-again-off-again, multibillion-dollar program to build the new European Fighter Aircraft now seems back on track, buoying supporters of the Continent’s largest single industrial project.

At a meeting in Brussels late last week, defense ministers of Britain, Germany, Italy and Spain--the four nations involved in the EFA project--agreed to go ahead with it.

Led by Britain, a reluctant Germany promised to continue funding the massive construction program that will eventually cost a staggering $35 billion.

The green light indicated, too, that at least 100,000 jobs in European aircraft and electronics industries will be ensured--a boon to flagging economies suffering deep unemployment.

As an official for British Aerospace, prime contractor for the EFA, put it: “This is a watershed for the future of the European defense industry. EFA is back on course.”

However, the Brussels agreement indicated that each country could scale back the expensive electronics and weapons extras on the advanced plane as its government saw fit.

The decision to proceed with the expensive fighter plane project was seen as a victory for British Defense Minister Malcolm Rifkind over Germany’s Volker Ruehe.

During the Cold War, the four European governments decided that they needed an advanced fighter plane to counter the latest-model Soviet aircraft--and that they wanted to build the plane themselves, rather than buying from the Americans or other plane makers.

The fighter was designed as a top-of-the-line weapon that would serve European air defense needs well into the 21st Century--powered by two engines, with lightweight, sophisticated carbon fibers for the air frame and wings, and advance avionics for navigation and fire control.

The aircraft industries in each of the four countries hailed the project as a means of keeping their work forces employed, while air chiefs applauded its up-to-date design.

But earlier this year, German Defense Minister Ruehe--conscious of his nation’s enormous financial drain from absorbing the former East Germany, and with no more Soviet threat--announced that Bonn would withdraw from the massive EFA project.

That decision caused consternation among the three other EFA partners, particularly Britain, which wanted a new fighter both for defense purposes and for the support it would bring to national economies.

The German announcement was especially galling because Britain has poured billions of dollars into the project’s research and development stages, and a prototype has already flown. Why allow billions in R&D; money to be wasted? the British asked.

At first, the Germans said they would, as a possible compromise, accept a drastically scaled-back fighter. But British air force senior officers pointed out that Ruehe seemed to be pressing for only a single-engine aircraft--much more dangerous for pilots to fly and also inferior to the latest Soviet planes, the Sukhoi SU-27 Flanker and the MIG-29. These are currently being sold to other countries--and thus could be put into the hands of potential enemies of Britain and its allies, it was argued.

“We can see no point in building a new fighter aircraft that is already inferior to the best the Russians are making,” commented a senior British officer. “We want a plane that will give us air superiority against any foe into the next century.”

But pressured by Germany to study a cheaper plane, the British came up with specifications for cost-cutting measures that reduced the price of each EFA plane by up to 30%--without significantly affecting its performance.

The base-line version of the new plane would cost about $57 million per aircraft,down from an originally estimated $85 million.

Under pressure from his own defense suppliers and Chancellor Helmut Kohl, Ruehe gave ground, and he has now agreed to go along with the lower-cost fighter--though he has suggested that each country may make modifications that could reduce the overall price even more.

The survival of the fighter program will safeguard an estimated 40,000 jobs in Britain alone among the main companies involved: British General Electric, Ferranti and Smith Industries in addition to British Aerospace.

Some 20,000 jobs have also been hanging in the balance in Germany--which was reportedly one of the factors that convinced Kohl to overrule his defense minister on the program.

Britain, Germany, Italy and Spain will all share in building the Rolls-Royce engines and components; Britain and Italy will build the wings; Germany and Spain the tail assemblage. Germany’s Daimler-Benz, Italy’s Alenia and Spain’s Construcconies Aeronauticas are all involved in the project.

Britain and Germany will each foot about one-third of the bill, while Italy will pick up 21% of the cost and Spain 13%.

Eventually, Britain intends to buy 250 EFAs, Germany 150, Italy 130 and Spain 72. These figures somewhat lower than those expected when the project was launched.

The United States will not directly participate or profit--that is, unless Germany decides to use American-made radar.

Still, the long-range future of the European Fighter Aircraft is somewhat up in the air because Germany has agreed only to prototype delivery--as opposed to full-scale production--pending another review in 1995.

But Britain’s Rifkind expressed full confidence that the work on the EFA will commence “in time to meet the in-service date of those partners requiring first deliveries to their air forces in 2000 (that is, Britain and Italy) while allowing other nations to introduce the aircraft at a later date.”