British Aerospace and GEC, who are heading a European consortium to develop the Meteor air-to-air missile, also fear that Britain's expertise in guided weapons could be lost if the rival Raytheon consortium is selected.
The value of the UK programme is about pounds 1bn, while sales of the missile system to other European countries buying the Eurofighter could be worth another pounds 1bn.
Beyond that there is a vast potential export market outside Europe which the BAe/GEC consortium fears could be affected if the Eurofighter is American- armed, since US approval would be needed for any sales to third countries.
The Ministry of Defence is due to decide between the two bids in the first half of this year and award the production contract towards the end of 1999.
The Meteor - a beyond visual range air-to-air missile capable of being fired before enemy aircraft have a chance to fire back - is due to go into service in 2005. It would arm both the Eurofighter and the Anglo- Swedish fighter aircraft, the Gripen, which is developed jointly by BAe and Saab. Until the Meteor enters service the Eurofighter and Gripen will be armed with an existing advanced medium range air-to-air missile. The Pentagon has already blocked an attempt by Sweden to sell the Gripen to Finland by refusing to allow the aircraft to be armed with its missile system.
Alan Garwood, deputy chief executive of Matra BAe Dynamics, said: "The outcome of this contest will decide whether the US has a complete monopoly over the air-to-air missile market for the next 30 years, as well as control over which countries we can sell the Eurofighter to."
The Meteor programme will safeguard up to 1,000 jobs at BAe sites in Stevenage, Bristol and Lostock near Bolton, and thousands of indirect jobs at suppliers as well as several thousand jobs across Europe. The other members of the consortium are Saab, Alenia of Spain and CASA of Spain.
The Eurofighter's main battle threat will be Russian-made SU35 and MiG 29 fighter aircraft, which are armed with a missile system known as AA12 which the Malaysians have already bought.
The advantage of the Meteor is that its ramjet motor technology allows it to be fired from a distance several times greater than the 30-kilometre range of existing medium-range air-to-air missiles.Reuse content