French President Sarkozy, (l), Governor of Minas Gerais state Aecio Neves, (2nd left), Governor of Rio de Janeiro state Sergio Cabral, Brazil's President Luiz Inacio Lula da Silva, (r), after signing agreements in Rio de Janeiro, 23 Dec. 23 2008

Brazil and France have signed a $12 billion defense deal that could lead to Latin America's first nuclear submarine.

Brazilian President Luiz Inacio Lula da Silva signed the agreement Tuesday in Rio de Janeiro with his French counterpart, Nicolas Sarkozy, who was in the city on a two-day visit.  

The submarine deal will involve Brazil's purchase of the technology to build four conventionally powered attack submarines and a nuclear-powered submarine.

Separately, Brazil is expected to buy 50 Cougar transport helicopters built locally by the subsidiary of the European aerospace group EADS.

Last week, Brazil presented a new defense plan which shifts the focus of its military toward protecting the Amazon and newly found massive, off-shore oil reserves.