C O N F I D E N T I A L SECTION 01 OF 02 ROME 000186

SIPDIS

E.O. 12958: DECL: 12/27/2011
TAGS: ETTC PREL ETRD TSPA PARM CH PREL ETRD TSPA PARM CH ITALY'>IT MTCRE ITETTC MTCRE EXPORT CONTROLS
SUBJECT: DELIVERY OF ATLANTIC BIRD DEMARCHE TO GOI AND
ALENIA

REF: SECSTATE 213498

CLASSIFIED BY: ESTCOUNS DAVID MULENEX FOR REASONS 1.5 B AND D.



1. (C) SUMMARY: EMBASSY DELIVERED REFTEL DEMARCHE TO
THE GOI AND ALENIA SPAZIO ON DECEMBER 18 AND 21,
RESPECTIVELY. BOTH CLEARLY UNDERSTOOD REFTEL MESSAGE THAT A
PRESIDENTIAL WAIVER OF THE EXPORT CONTROLS REGARDING ATLANTIC
BIRD WOULD BE HIGHLY UNLIKELY IN THE CONTEXT OF CURRENT
CHINESE UNRESPONSIVENESS TO U.S. NON-PROLIFERATION CONCERNS.
ALENIA REPRESENTATIVES EXPRESSED FRUSTRATION WITH THE
SITUATION, BUT THEY ALSO POSED A HYPOTHETICAL SOLUTION THE
ISSUE BY REMOVING THE U.S. ORIGIN COMPONENTS FROM ATLANTIC
BIRD. AN ALENIA OFFICIAL ADMITTED THAT HIS COMPANY WISHED TO
PURSUE ADDITIONAL CHINESE CONTRACTS BUT WAS CONCERNED ABOUT
POTENTIAL U.S. POLITICAL INTERFERENCE. ALENIA EXPRESSED THE
DESIRE FOR A BILATERAL ITALO-AMERICAN AGREEMENT LAYING OUT
CLEAR RULES ON COOPERATION WITH CHINA. ITALIAN AMBASSADOR TO
THE U.S. SALLEO WILL BE TAKING THIS ISSUE UP WITH THE
DEPARTMENT IN THE NEAR FUTURE. END SUMMARY.

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MINISTRY OF FOREIGN AFFAIRS REACTION
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2. (C) ON DECEMBER 18, 2001, ESTCOUNS DELIVERED REFTEL
DEMARCHE TO UGO DE MOHR, HEAD OF THE ITALIAN FOREIGN
MINISTRY'S DUAL-USE EXPORT CONTROL OFFICE. DE MOHR INDICATED
THAT HE UNDERSTOOD THE ULTIMATE POINT OF THE DEMARCHE
REGARDING U.S. REASONS FOR NOT PURSUING A PRESIDENTIAL WAIVER
TO THE TIANANMEN SANCTIONS AND ACCEPTED THE DEMARCHE LARGELY
WITHOUT COMMENT. HIS ONLY QUESTION WAS WHETHER THE EVENTS OF
SEPTEMBER 11, 2001 HAD CHANGED U.S. ATTITUDES TOWARD CHINA.
ESTCOUNS POINTED OUT THAT THE DEMARCHE INDICATED

THAT
SEPTEMBER 11 HAD NOT CHANGED U.S. CONCERNS REGARDING CHINA'S
UNHELPFUL ATTITUDE TOWARD STEMMING THE PROLIFERATION OF
MISSILE RELATED TECHNOLOGY.

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ALENIA SPAZIO
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3. (C) DE MOHR ALSO ASKED WHETHER THE UPCOMING BILATERAL
"GLOBALIZATION" TALKS CONCERNING DEFENSE TRADE MIGHT INCLUDE
DISCUSSION OF DUAL-USE EXPORTS AND THIRD PARTY TRANSFERS. HE
REFERED TO EMBASSY DISCUSSIONS IN SUMMER 2001, IN WHICH HE
SUGGESTED THAT THE U.S. AND ITALY SHOULD SEEK SOME COMMON
GUIDELINES CONCERNING TRADE IN POTENTIALLY SENSITIVE ITEMS TO
CHINA. THE GOI GOAL IS TO STAY ABREAST WITH THE U.S. IN
EXPLORING TRADE OPPORTUNITIES WITH CHINA, WHILE REMAINING
SENSITIVE AND RESPONSIVE TO USG CONCERNS ABOUT TECHNOLOGY
TRANSFER. ESTCOUNS PROMISD TO SEEK CLARIFICATION FROM THE
DEPARTMENT AND DOD CONCERNING THE SCOPE OF THE TALKS.


4. (SBU) LENIA SPAZIO CEO GIUSEPPE VIRIGLIO AND ALENIA
MAKETING VP PIANTELLA, RECEIVED REFTEL DEMARCHE FROMEST
OFFICERS ON DECEMBER 21. ESTCOUNS STRESSED HE
CONFIDENTIALITY OF THE DEMARCHE, PARTICULARLY REGARDING OUR

SIPDIS
POLICY TOWARD CHINA AND NOTED THAT IT WAS HIGHLY UNUSUAL FOR
THE UNITED STATES TO MAKE SUCH A DOCUMENT RELEASABLE TO A
PRIVATE COMPANY. VIRIGLIO RESPONDED WITH AN EXPRESSION OF
APPRECIATION FOR THE DEMARCHE AND REITERATION OF ALENIA'S
POSITION THAT THE LAUNCH INTO ORBIT OF ATLANTIC BIRD FROM
CHINESE SOILDOES NOT CONSTITUTE AN EXPORT TO CHINA.


5. (SBU) VIRIGLIO ASKED THAT IF ALENIA WERE PREPARED TO
REMOVE THE U.S. ORIGIN COMPONENTS FROM ATLANTIC BIRD AND
REPLACE THEM WITH EUROPEAN COMPONENTS, IF TIS WOULD OBVIATE
U.S. OBJECTIONS. HE ASKED WHETER THE U.S. GOVERNMENT WOULD
STILL ATTEMPT TO OBSTRUCT THE LAUNCH OF ATLANTIC BIRD ONBOARD
A CHINEE LONG MARCH SPACE LAUNCH VEHICLE (SLV), EVEN THOUH
THERE WOULD NOT BE ANY U.S. COMPONENTS ABOARD. VIRIGLIO
EXPANDED ON THIS QUESTION BY ASKING WHTHER THE UNITED STATES
WOULD BE OPPOSED TO ALENIA COMPETING FOR CHINESE AEROSPACE
CONTRACTS. HE EXPLAINED THAT IF ALENIA RENEGED ON THE USE OF
THE LONG MARCH SLV FOR ATLANTIC BIRD, ALENIA WOULD NOT BE
ABLE TO COMPETE FOR A NUMBER OF FUTURE CHINESE
TELECOMMUNICATIONS SATELLITE CONTRACTS. HE MENTIONED THE
DONGFENG IV AS AN EXAMPLE BUT DID NOT ELABORATE FURTHER. IN
EFFECT, VIRIGLIO INTIMATED THAT CHINA WOULD TREAT THE
ATLANTIC BIRD LAUNCH AS A LITMUS TEST IN DETERMINING ALENIA'S
RELIABILITY AS A SUITABLE PARTNER FOR FUTURE CHINESE SPACE
PROJECTS.


6. (SBU) VIRIGLIO REITERATED ALENIA'S INTENTION TO COMPLY
STRINGENTLY WITH RELEVANT U.S. LEGISLATION REGARDING EXPORT
CONTROLS. IN THE CASE OF CHINA, A POTENTIALLY LUCRATIVE
MARKET FOR ALENIA, VIRIGLIO INDICATED HIS DESIRE FOR A
BILATERAL GOVERNMENT TO GOVERNMENT AGREEMENT THAT WOULD SET
OUT CLEAR RULES FOR FUTURE COOPERATION WITH CHINA. HE
COMPLAINED THAT THE UNCERTAINTY OF A CASE-BY-CASE APPROACH
WAS MAKING IT EXTREMELY DIFFICULT FOR ALENIA TO ESTABLISH A
COORDINATED BUSINESS PLAN TOWARD THE CHINESE MARKET. HE
INDICATED THAT THE ITALIAN AMBASSADOR TO THE UNITED STATES,

R 140619Z JAN 02
FM AMEMBASSY ROME
TO SECSTATE WASHDC 1639
INFO AMEMBASSY BEIJING

C O N F I D E N T I A L SECTION 02 OF 02 ROME 000186

SIPDIS

E.O. 12958: DECL: 12/27/2011
TAGS: ETTC PREL ETRD TSPA PARM CH PREL ETRD TSPA PARM CH IT MTCRE ITETTC MTCRE EXPORT CONTROLS
SUBJECT: DELIVERY OF ATLANTIC BIRD DEMARCHE TO GOI AND
ALENIA

AMB. SALLEO, WOULD APPROACH THE DEPARTMENT TO FACILITATE A
SERIES OF MEETINGS BETWEEN ALENIA EXECUTIVES AND RELEVANT
U.S. OFFICIALS TO LAY THE GROUNDWORK FOR SUCH AN AGREEMENT.


7. (C) EMBASSY COMMENT. WE HEARD LOUD AND CLEAR FOR THE
FIRST TIME FROM ALENIA OFFICIALS THAT THE PRIMARY
SIGNIFICANCE OF ATLANTIC BIRD FOR THE COMPANY IS NOT THE SUNK
COSTS FOR THE CHINESE LONG MARCH SLV, BUT THE DOWNSTREAM
ORDER BOOK THAT MAY BE AT STAKE AND WORTH HUNDREDS OF
MILLIONS OF DOLLARS. WHILE WE HAVE NO REASON TO BELIEVE THAT
MFA WILL BACK OFF ITS REPORT FOR OUR DECISION, WE MAY HEAR
FROM AMB. SALLEO AND MFA SOME GROUSING AND PROPOSALS TO AVOID
INSTANCES SIMILAR TO ATLANTIC BIRD IN THE FUTURE. END
COMMENT.
POPE


2002ROME00186 - Classification: CONFIDENTIAL