U.S. Denies Discussing with Egypt Co-production of U.S. Fighter Planes.

The Reagan Administration denied today that it is discussing with Egypt the possibility of co-production of U.S. fighter planes in Egypt in order to be able to supply friendly Middle East and Persian Gulf states.

State Department deputy spokesman Alan Romberg said that in December 1980, at the request of the Northrop Corp. the Administration gave the California based company permission to discuss co-production of its F-5G fighter with Egypt. But this was not authorization for co-production or for its financing, Romberg stressed.

A report in The Washington Post today said the Administration has asked Saudi Arabia to lend Egypt $2 billion to finance the manufacturing of the planes in co-production with the U.S. The U.S. would provide the designs, engineering and engines but not its most secret technology. However, a Pentagon spokesman also said today that no such discussions have been held with either Egypt or Saudi Arabia.

The spokesman said that while co-production may come in the future it has not yet been approved by the U.S. He said it also could not be accomplished without first determining how the project would be financed and this has not been discussed with either Egypt or the Saudis.

The F-5G is the plane which the U.S. recently announced that it is selling to Bahrain. However only four of these planes, known as the Tiger-shark, are being sold to the Persian Gulf state. But Northrop would need to sell a much larger number to some other countries before it could put the F-5G into mass production.

In another development, Romberg said special envoy Philip Habib will meet with President Reagan at the White House tomorrow to discuss Habib’s recent swing around various Mideast capitals. Habib will also meet with State Department officials, although it was not clear whether he would see Secretary of State George Shulrz who is in New York all this week attending the United Nations General Assembly meetings.