DUTCH INITIAL REACTIONS TO DTSI, MORE ON F-16 MNCP

1.(U) ACTION REQUEST - SEE PARA. 4.


2.(C) SUMMARY: AT FIRST GLANCE, THE DUTCH "WELCOME" THE
DTSI AND SEE IT AS A "POSITIVE STEP IN TRANSATLANTIC DEFENSE
TRADE." NEVERTHELESS, THEY ARE RESERVING OVERALL JUDGMENT ON
THE PROPOSALS UNTIL THEY LEARN MORE ABOUT THEM. THEY ARE ALSO
EAGER TO LEARN MORE ABOUT HOW THE DTSI AND THE EXISTING
GLOBALIZATION TALKS RELATE TO EACH OTHER. END SUMMARY.


3.(C) EMBASSY POLITICAL AND ODC REPS MET ON 6/13 WITH MFA
AND MOD OFFICIALS TO DISCUSS INITIAL DUTCH REACTIONS TO THE
DEFENSE TRADE SECURITY INITIATIVE. DUTCH ECONOMICS MINISTRY
OFFICIALS PREVIOUSLY HAD ATTENDED A DUTCH INTERNAL MEETING
AND THEIR COMMENTS WERE PASSED ON BY MFA OFFICIALS.
CAVEATING THAT THEIR REACTIONS WERE ONLY "INITIAL AND NOT YET
AUTHORITATIVE," DUTCH DEPUTY SECURITY POLICY PDAS GAIUS
SCHELTEMA AND DAS FOR EXPORT CONTROLS JOHAN COERT "WELCOMED
THE DTSI" AS AN IMPORTANT STEP FORWARD IN THE TRANSATLANTIC
TRADE MARKETPLACE. SCHELTEMA SAID THAT THE "SPECIFIC LINK TO
THE DCI IS ALSO POSITIVE AND IMPORTANT." COERT ADDED THE
DUTCH RECOGNIZED THAT MANY OF THE DTSI ELEMENTS WERE KEYED TO
MOU GROUP LONG-STANDING TOPICS. ASKED BY POLOFF, COERT ADDED
THAT INFORMAL DISCUSSION AMONG MOU GROUP MEMBERS IN
WASHINGTON WAS ALSO "POSITIVE AND DEEMED A REAL STEP FORWARD."
COERT ALSO ADDED THAT THE DUTCH ECONOMICS MINISTRY AEROSPACE
DEPARTMENT DIRECTOR HAD JUST REPORTED TO HIS MFA AND MOD
COLLEAGUES THAT DUTCH DEFENSE-RELATED COMPANIES WERE
IMPRESSED BY THE INITIATIVE AND GENUINELY SENSED NEW
POTENTIAL MARKET ACCESS AND TEAMING OPPORTUNITIES AS A RESULT
OF THE DTSI.


4.(C) DUTCH MOD REP H.J. JANSEN EXPRESSED A KEEN INTEREST,
SECONDED BY THE MFA, IN LEARNING HOW THE EXISTING OSD-LED
GLOBALIZATION DIALOGUE RELATED TO THE DTSI. POLOFF EXPLAINED
THAT DTSI PRIMARILY RELATED TO THE EXPORT-CONTROL AND
SENSITIVE TECHNOLOGY/INFORMATION SAFEGUARDING ELEMENTS ON THE
GLOBALIZATION PILLAR STRUCTURE, BUT THAT THE TWO PROCESSES
WERE STILL DIFFERENT. THE DUTCH NOTED THAT DASD VOLKMAN
ALREADY HAD INVITED MOD'S DIRECTOR FOR PLANS AND
INTERNATIONAL MATERIEL RELATIONS, BGEN TEUSSINK, TO JULY 11
TALKS IN WASHINGTON TO FURTHER EXPLORE A POSSIBLE
U.S.-NETHERLANDS DECLARATION OF PRINCIPLES FOR DEFENSE
EQUIPMENT AND INDUSTRIAL COOPERATION (DOP). THEY SAID THAT
THEY HOPED TO HEAR MORE DETAILS THEN ON WHEN INDIVIDUAL
ELEMENTS OF THE DTSI WOULD BECOME OFFICIAL, HOW THEY WOULD
RELATE TO THE DOP PROCESS AND WHAT SPECIFICALLY WAS EXPECTED
OF DUTCH TO COMPLY WITH ASPECTS OF THE OPPORTUNITIES OUTLINED
IN THE DOP AND DTSI DIALOGUES. (EMBASSY COMMENT; THIS WOULD
BE AN EXCELLENT OPPORTUNITY FOR PM PDAS SUCHAN TO BRIEF DUTCH
OFFICIALS ON THE DTSI, AS NOTED IN REF.B. END COMMENT.) BOTH
MOD AND MFA INTERLOCUTORS ALSO SUGGESTED THE U.S. USE
COMBINATIONS OF A WEBSITE, REGULAR MOU GROUP BRIEFINGS, AND
BOTH BACKGROUND NATO COMMITTEE AND POLITICAL LEVEL GATHERINGS
TO REPORT PROGRESS. THEREBY, THEY INDICATED, THE ALLIANCE
COULD USE PEER PRESSURE AS A CATALYST FOR BUILDING AND
MAINTAINING MOMENTUM FOR THE PROGRAM.


5.(C) EMBASSY OFFICIALS THEN REVIEWED THE DTSI ELEMENTS, WIT
THE DUTCH PROBING TO DETERMINE WHAT WOULD BE REQUIRED OF THE
DUTCH GOVERNMENT, EITHER IN POLITICAL COMMITMENTS, REGULATORY
ADJUSTMENTS OR NEW LEGISLATION, TO RESPOND TO THE U.S.
OVERTURES. WE EXPLAINED THAT THEY SHOULD RECONSIDER THEIR
PAST REFUSAL TO SIGN ONTO A BLANKET ASSURANCES AND ADVANCE
CONSENT FOR THIRD COUNTRY TRANSFER OF USG-SOLD OR GRANTED
DEFENSE ARTICLES STATEMENT. THE MFA SECURITY POLICY LAWYERS
WERE NON-COMMITTAL IN RESPONSE, BUT HEARD OUT OUR ARGUMENTS
ABOUT HOW IT WOULD STREAMLINE LICENSING, REDUCE RISKS FOR
CAPITAL INVESTORS IN DEFENSE PROGRAMS AND BE A CATALYST FOR
MORE PREDICTABLE TRANSATLANTIC MARKETING ARRANGEMENTS, ALL
CATALYSTS TO BETTER NATO DEFENSE INDUSTRIAL COOPERATION.
(NOTE: THE DUTCH CHAMPIONED MOU GROUP REVIEW OF THIS MEASURE
SEVERAL YEARS AGO ONLY TO REFUSE TO SIGN ONTO SUCH LANGUAGE
AT THE CONCLUSION OF THE DIALOGUE WITH THE USG. END NOTE).
WE ALSO NOTED THAT THEY ALREADY OPERATE A SPECIAL EMBASSY
LICENSING PROGRAM. THE DUTCH SEEMED MOST INTERESTED IN
LEARNING MORE ABOUT THE MAJOR PROJECT AND GLOBAL COOPERATIVE
PROGRAM AUTHORIZATIONS AS WELL AS WHAT ROLE THEY MIGHT PLAY
IN FACILITATING DUTCH BUSINESSES PARTICIPATING IN THE TECH
DATA EXPORT AUTHORIZATION.


6.(C) SEPARATELY, DUTCH DEPUTY CHOD VAN BAAL DISCUSSED THE
F-16 MNCP POSSIBLE JOINT ACQUISITION OF U.S. PGMS WITH POLOFF
ON 6/14, NOTING IT COULD BE WORTH UP TO USD 400 MILLION IN
EVENTUAL PURCHASES. HE SOUGHT ASSURANCES THAT THE DTSI COULD
ACCOMMODATE THE LIKELY NECESSARY WAREHOUSING AND DISTRIBUTION
PERMISSIONS AND MULTIPLE DESTINATION LICENSES. POLOFF
EXPLAINED THAT THE ITEMS WERE HLSG-LISTED PRIORITIES AND THUS
A KEY FOCUS OF THE DTSI. WHILE OFFERING NO SPECIFIC, BINDING
ASSURANCE, POLOFF NOTED THE SORT OF "JOINT BUY" PROPOSED ON
THE NATO DEFMIN MARGINS WOULD BE THOSE WE HOPE TO EXPEDITE
WITH THE FMS REFORMS. VAN BAAL SEEMED CONTENT WITH ANSWER
AND INDICATED THAT HE MIGHT SUGGEST TO BGEN TEUSSINK THAT
THIS ISSUE BE ADDRESSED IN THE JULY 11 MEETINGS WITH DASD
VOLKMAN. VAN BAAL ALSO NOTED THAT, WHILE THE DANES STILL
NEEDED MORE TIME TO EXAMINE SOME OF THE "VIRTUAL WAREHOUSING"
PROPOSALS AND COST FIGURES, HE FORESAW AN EARLY FALL 2000
TIMEFRAME FOR THE MNCP COUNTRIES TO FINALIZE THEIR PROPOSAL
FOR THE JOINT PGM ACQUISITION. HE ADDED THAT THE FIRST
WORKING GROUP IMPLEMENTATION MEETING WOULD BE "NEXT WEEK" IN
LEUVEN BELGIUM. HE ALSO ELABORATED THAT THE MNCP COUNTRIES
WERE ALL SEEKING LANTIRN AND WOULD FOCUS THEIR VIRTUAL
WAREHOUSING ACQUISITIONS ALMOST EXCLUSIVELY ON THE NEW
GPS-GUIDED FAMILY OF PGM'S. "THIS WAY WE CAN BUY INTO THE
U.S. WAR STOCKS FOR CRISIS SITUATIONS," HE SUMMARIZED," AND
YOU CAN BE REASSURED THAT WE WILL NOT BUY THESE SORTS OF
BOMBS ELSEWHERE."


SCHNEIDER