Identifier
Created
Classification
Origin
02ROME620
2002-02-08 09:15:00
CONFIDENTIAL
Embassy Rome
Cable title:
JSF/ITALY: POSITIVE OUTLOOK FOR MOU BUT ECONOMIC
how-toThis record is a partial extract of the original cable. The full text of the original cable is not available.
C O N F I D E N T I A L SECTION 01 OF 02 ROME 000620
SIPDIS
DEFENSE FOR DEPSECDEF AND USD AT&L
E.O. 12958: DECL: 02/07/2012
TAGS: MARR EAIR PGOV PREL EAIR PGOV PREL IT ITMARR
SUBJECT: JSF/ITALY: POSITIVE OUTLOOK FOR MOU BUT ECONOMIC
CASE NOT MADE
REF: A. (A) 01 ROME 6545
B. (B) ROME 474
CLASSIFIED BY: ECONOMIC MINISTER MARGARET DEAN
FOR REASONS 1.5 (B) AND (D).
CONFIDENTIAL
PAGE 02 ROME 00620 01 OF 02 081322Z
C O N F I D E N T I A L SECTION 01 OF 02 ROME 000620
SIPDIS
DEFENSE FOR DEPSECDEF AND USD AT&L
E.O. 12958: DECL: 02/07/2012
TAGS: MARR EAIR PGOV PREL EAIR PGOV PREL IT ITMARR
SUBJECT: JSF/ITALY: POSITIVE OUTLOOK FOR MOU BUT ECONOMIC
CASE NOT MADE
REF: A. (A) 01 ROME 6545
B. (B) ROME 474
CLASSIFIED BY: ECONOMIC MINISTER MARGARET DEAN
FOR REASONS 1.5 (B) AND (D).
CONFIDENTIAL
PAGE 02 ROME 00620 01 OF 02 081322Z
1. (C) SUMMARY: WHILE PRIME MINISTER BERLUSCONI IS LIKELY
TO SIGN ITALY UP FOR THE JOINT STRIKE FIGHTER (JSF) PROGRAM,
THE PERCEPTION IN NON-DEFENSE MINISTRIES IS OF AN UNEQUAL
AGREEMENT, WITH INSUFFICIENT ECONOMIC/INDUSTRIAL BENEFITS FOR
ITALY. ACCORDING TO MINISTRY OF PRODUCTIVE ACTIVITIES
AEROSPACE DIRECTOR (PROTECT) CUZZONI, NO ATTEMPT HAS BEEN
MADE BY THE MINISTRY OF DEFENSE TO DEMONSTRATE THE ECONOMIC
OR INDUSTRIAL BENEFITS OF JSF FOR ITALY, LEAVING A PERCEPTION
THAT THE CASE CANNOT BE MADE. ALENIA'S ZAPPA HAS REPORTEDLY
GAINED SUPPORT FROM PRESIDENT CIAMPI AND NATIONAL ARMAMENTS
DIRECTOR ADMIRAL DI PAOLA TO PRESS THE U.S. FOR A BETTER DEAL
(DURING DI PAOLA'S VISIT TO WASHINGTON FEB. 12-13). CUZZONI
DOUBTS THAT THE PENDING BILATERAL MOU WILL BE DERAILED, BUT
FEARED POLITICAL FALLOUT FOR BERLUSCONI IF THE CENTER-LEFT
PAINTS HIM AS HAVING SIGNED AN UNEQUAL ACCORD AGAINST ITALY'S
ECONOMIC INTERESTS. END SUMMARY.
2. (C) AT LUNCH FEBRUARY 6 WITH ECON COUNSELOR, ALFREDO
CUZZONI (PROTECT),AEROSPACE DIRECTOR FOR THE MINISTRY OF
PRODUCTIVE ACTIVITIES, SAID THAT PRESIDENT CIAMPI HAD AGREED
TO TAKE ON THE PRIME MINISTER REGARDING JSF ON BEHALF OF
ITALIAN INDUSTRY (AND ALENIA IN PARTICULAR). THIS WOULD BE
PART OF A COMBINED STRATEGY TO PRESS FOR A BETTER DEAL --
CIAMPI AT THE HIGHEST POLITICAL LEVEL, NATIONAL ARMAMENTS
DIRECTOR ADMIRAL DI PAOLA RAISING THE ISSUE WITH EMBASSY AND
IN WASHINGTON MEETINGS ON FEBRUARY 12-13, AND ALENIA CEO
ZAPPA CONTINUING TO PRESS LOCKHEED MARTIN. ZAPPA HAS
REPORTEDLY CONVINCED DI PAOLA AND CIAMPI THAT -- IF THE GOI
REFUSES TO SIGN A BILATERAL JSF MOU UNTIL ALENIA IS SATISFIED
WITH ITS DEAL -- THE USG WILL HAVE NO CHOICE BUT TO LEAN ON
LOCKHEED TO BETTER ITS TERMS.
CONFIDENTIAL
PAGE 03 ROME 00620 01 OF 02 081322Z
3. (C) ECON COUNSELOR POINTED OUT A NUMBER OF ADVANTAGES TO
ITALY THOUGH JSF PARTICIPATION, INCLUDING EXPOSURE TO NEW
MANUFACTURING, DESIGN AND MANAGEMENT TECHNOLGY, LONG TERM
ITALIAN JOBS AND REVENUES BASED ON THE GLOBAL PRODUCTION RUN
RATHER THAN JUST THE ITALIAN RUN, BENEFITS TO ITALIAN SMES AS
WELL AS ALENIA AND FIATAVIO. SHE ALSO DISCUSSED THE
IMPORTANCE OF PUTTING ASIDE THE OFFSETS/WORKSHARE MENTALITY,
AND LOOKING TOWARD THE BENEFITS OF MARKET/PERFORMANCE BASED
CONTRACTS. CUZZONI RESPONDED THAT ITALY COULD ONLY COUNT ON
WRITTEN GUARANTEES, THAT STATEMENTS OF POSSIBLE FUTURE
BENEFITS HAD NO VALUE WITHOUT GUARANTEES AND THAT, IN HIS
MANY YEARS IN THIS AREA HE HAD SEEN U.S. PROMISES FADE ON
MANY OTHER DEALS.
4. (C) WHEN ECON COUNSELOR EXPLAINED THAT THE BILATERAL MOU
MUST BE SIGNED BEFORE THE INDUSTRY CONTRACTS ARE SIGNED,
CUZZONI WAS SURPRISED. HE NOTED THAT NEITHER DI PAOLO NOR
DEFENSE NOR ZAPPA HAD TOLD HIM THIS. "IN THAT CASE, WE HAVE
NO LEVERAGE. WE HAVE TO ACCEPT WHAT IS ON THE TABLE," HE
STATED.
5. (C) CUZZONI NOTED THAT HE, HIS MINISTER (MARZANO) AND
MINISTER TREMONTI OF FINANCE ARE STILL SEEKING SOLID
SUPPORTING DATA ON ECONOMIC BENEFITS FROM JSF FOR ITALY
(REFTEL A). THE ITALIAN DEFENSE MINISTRY IS SOLD ON THE
MILITARY BENEFITS, BUT NO ONE HAS CRITICALLY EXAMINED THE
INDUSTRIAL/ECONOMIC BENEFITS FROM THIS ONE BILLION DOLLAR GOI
INVESTMENT. ABSENT ANY SUCH CASE BEING MADE, THE PRESUMPTION
IN THE MINISTRY OF PRODUCTIVE ACTIVITIES IS THAT THE CASE
CANNOT BE MADE. AT THE SAME TIME, ALENIA AND FIAT AVIO
CONFIDENTIAL
PAGE 04 ROME 00620 01 OF 02 081322Z
OFFICIALS ARE TELLING THE GOI THAT THE DEAL IS NOT
SUFFICIENTLY ATTRACTIVE. GOI OFFICIALS BELIEVE THAT THE UK
SIDE LETTER OFFERED SUBSTANTIALLY BETTER TERMS FOR UK
INDUSTRY.
6. (C) NONETHELESS, CUZZONI NOW THINKS THAT A POLITICAL
DECISION IN FAVOR OF JSF IS LIKELY. HE BELIEVES THAT CIAMPI
AND ZAPPA WILL TRY TO DERAIL IT, BUT THAT BERLUSCONI WILL
DECIDE FOR JSF IN THE END. HE IS CONCERNED, HOWEVER, THAT
CIAMPI AND ZAPPA MIGHT CREATE A PARLIAMENTARY AND PUBLIC
PERCEPTION THAT THE PRIME MINISTER HAS SIGNED AN UNEQUAL
AGREEMENT WITH LITTLE ECONOMIC BENEFIT FOR ITALY IN TERMS OF
TECHNOLOGY, JOBS OR MONEY.
7. (C) COMMENT: ABSENT ANY INTERAGENCY PROCESS IN THE
INTERNAL ITALIAN DISCUSSIONS, THE MINISTRY OF DEFENSE HAS NOT
EXPLAINED, AND APPARENTLY CANNOT EXPLAIN, THE COST/BENEFIT TO
ITALY OF JSF PARTICIPATION. ZAPPA (AND POSSIBLY ALSO FIAT)
HAS ARGUED TIRELESSLY THAT THE DEAL IS BAD FOR ITALY.
DEFENSE MINISTRY OFFICIALS SIMPLY CONVEY THEIR ENTHUSIASM FOR
THE JSF. THE EMBASSY HAS TALKED TO OTHER MINISTRIES,
STARTING AT THE AMBASSADORIAL LEVEL, TO EXPLAIN THE POTENTIAL
BENEFITS, INCLUDING THOSE BEYONE ZAPPA'S ALENIA. CUZZONI
WAS, FOR EXAMPLE, COMPLETELY UNAWARE OF THE POTENTIAL FOR
CONFIDENTIAL
CONFIDENTIAL PTQ0267
PAGE 01 ROME 00620 02 OF 02 081244Z
ACTION EUR-00
INFO LOG-00 AID-00 ACQ-00 CEA-01 CIAE-00 COME-00 CTME-00
DOTE-00 SRPP-00 DS-00 EB-00 EXIM-01 E-00 FAAE-00
VC-00 FRB-00 H-01 TEDE-00 INR-00 ITC-01 L-00
AC-01 NSAE-00 NSCE-00 OES-01 OMB-01 OPIC-01 PC-01
PM-00 ACE-00 SP-00 SSO-00 SS-00 STR-00 TRSE-00
USIE-00 EPAE-00 SNIS-00 NISC-00 PMB-00 DSCC-00 DRL-02
G-00 SAS-00 /011W
-------------- 640625 081244Z /45
O 080915Z FEB 02
FM AMEMBASSY ROME
TO SECSTATE WASHDC IMMEDIATE 2027
INFO SECDEF WASHDC IMMEDIATE
C O N F I D E N T I A L SECTION 02 OF 02 ROME 000620
SIPDIS
DEFENSE FOR DEPSECDEF AND USD AT&L
E.O. 12958: DECL: 02/07/2012
TAGS: MARR EAIR PGOV PREL EAIR PGOV PREL IT ITMARR
SUBJECT: JSF/ITALY: POSITIVE OUTLOOK FOR MOU BUT ECONOMIC
CASE NOT MADE
FIAT AVIO TO PRODUCE ENGINE GEARBOXES FOR THE ENTIRE WORLD
JSF PRODUCTION RUN. HE EXPRESSED INITIAL DISBELIEF, THEN
RESPONDED THAT THIS WAS A GREAT BENEFIT AND WAS SURPRISED
THAT HE HAD NOT BEEN TOLD OF IT BEFORE. SIMILARLY, HE WAS
IMPRESSED WITH THE LIST OF POTENTIAL ITALIAN SMES WITH WHICH
CONFIDENTIAL
PAGE 02 ROME 00620 02 OF 02 081244Z
LOCKHEED MARTIN WAS CONSIDERING CONTRACTS.
SEMBLER
CONFIDENTIAL
>
2002ROME00620 - Classification: CONFIDENTIAL
SIPDIS
DEFENSE FOR DEPSECDEF AND USD AT&L
E.O. 12958: DECL: 02/07/2012
TAGS: MARR EAIR PGOV PREL EAIR PGOV PREL IT ITMARR
SUBJECT: JSF/ITALY: POSITIVE OUTLOOK FOR MOU BUT ECONOMIC
CASE NOT MADE
REF: A. (A) 01 ROME 6545
B. (B) ROME 474
CLASSIFIED BY: ECONOMIC MINISTER MARGARET DEAN
FOR REASONS 1.5 (B) AND (D).
CONFIDENTIAL
PAGE 02 ROME 00620 01 OF 02 081322Z
1. (C) SUMMARY: WHILE PRIME MINISTER BERLUSCONI IS LIKELY
TO SIGN ITALY UP FOR THE JOINT STRIKE FIGHTER (JSF) PROGRAM,
THE PERCEPTION IN NON-DEFENSE MINISTRIES IS OF AN UNEQUAL
AGREEMENT, WITH INSUFFICIENT ECONOMIC/INDUSTRIAL BENEFITS FOR
ITALY. ACCORDING TO MINISTRY OF PRODUCTIVE ACTIVITIES
AEROSPACE DIRECTOR (PROTECT) CUZZONI, NO ATTEMPT HAS BEEN
MADE BY THE MINISTRY OF DEFENSE TO DEMONSTRATE THE ECONOMIC
OR INDUSTRIAL BENEFITS OF JSF FOR ITALY, LEAVING A PERCEPTION
THAT THE CASE CANNOT BE MADE. ALENIA'S ZAPPA HAS REPORTEDLY
GAINED SUPPORT FROM PRESIDENT CIAMPI AND NATIONAL ARMAMENTS
DIRECTOR ADMIRAL DI PAOLA TO PRESS THE U.S. FOR A BETTER DEAL
(DURING DI PAOLA'S VISIT TO WASHINGTON FEB. 12-13). CUZZONI
DOUBTS THAT THE PENDING BILATERAL MOU WILL BE DERAILED, BUT
FEARED POLITICAL FALLOUT FOR BERLUSCONI IF THE CENTER-LEFT
PAINTS HIM AS HAVING SIGNED AN UNEQUAL ACCORD AGAINST ITALY'S
ECONOMIC INTERESTS. END SUMMARY.
2. (C) AT LUNCH FEBRUARY 6 WITH ECON COUNSELOR, ALFREDO
CUZZONI (PROTECT),AEROSPACE DIRECTOR FOR THE MINISTRY OF
PRODUCTIVE ACTIVITIES, SAID THAT PRESIDENT CIAMPI HAD AGREED
TO TAKE ON THE PRIME MINISTER REGARDING JSF ON BEHALF OF
ITALIAN INDUSTRY (AND ALENIA IN PARTICULAR). THIS WOULD BE
PART OF A COMBINED STRATEGY TO PRESS FOR A BETTER DEAL --
CIAMPI AT THE HIGHEST POLITICAL LEVEL, NATIONAL ARMAMENTS
DIRECTOR ADMIRAL DI PAOLA RAISING THE ISSUE WITH EMBASSY AND
IN WASHINGTON MEETINGS ON FEBRUARY 12-13, AND ALENIA CEO
ZAPPA CONTINUING TO PRESS LOCKHEED MARTIN. ZAPPA HAS
REPORTEDLY CONVINCED DI PAOLA AND CIAMPI THAT -- IF THE GOI
REFUSES TO SIGN A BILATERAL JSF MOU UNTIL ALENIA IS SATISFIED
WITH ITS DEAL -- THE USG WILL HAVE NO CHOICE BUT TO LEAN ON
LOCKHEED TO BETTER ITS TERMS.
CONFIDENTIAL
PAGE 03 ROME 00620 01 OF 02 081322Z
3. (C) ECON COUNSELOR POINTED OUT A NUMBER OF ADVANTAGES TO
ITALY THOUGH JSF PARTICIPATION, INCLUDING EXPOSURE TO NEW
MANUFACTURING, DESIGN AND MANAGEMENT TECHNOLGY, LONG TERM
ITALIAN JOBS AND REVENUES BASED ON THE GLOBAL PRODUCTION RUN
RATHER THAN JUST THE ITALIAN RUN, BENEFITS TO ITALIAN SMES AS
WELL AS ALENIA AND FIATAVIO. SHE ALSO DISCUSSED THE
IMPORTANCE OF PUTTING ASIDE THE OFFSETS/WORKSHARE MENTALITY,
AND LOOKING TOWARD THE BENEFITS OF MARKET/PERFORMANCE BASED
CONTRACTS. CUZZONI RESPONDED THAT ITALY COULD ONLY COUNT ON
WRITTEN GUARANTEES, THAT STATEMENTS OF POSSIBLE FUTURE
BENEFITS HAD NO VALUE WITHOUT GUARANTEES AND THAT, IN HIS
MANY YEARS IN THIS AREA HE HAD SEEN U.S. PROMISES FADE ON
MANY OTHER DEALS.
4. (C) WHEN ECON COUNSELOR EXPLAINED THAT THE BILATERAL MOU
MUST BE SIGNED BEFORE THE INDUSTRY CONTRACTS ARE SIGNED,
CUZZONI WAS SURPRISED. HE NOTED THAT NEITHER DI PAOLO NOR
DEFENSE NOR ZAPPA HAD TOLD HIM THIS. "IN THAT CASE, WE HAVE
NO LEVERAGE. WE HAVE TO ACCEPT WHAT IS ON THE TABLE," HE
STATED.
5. (C) CUZZONI NOTED THAT HE, HIS MINISTER (MARZANO) AND
MINISTER TREMONTI OF FINANCE ARE STILL SEEKING SOLID
SUPPORTING DATA ON ECONOMIC BENEFITS FROM JSF FOR ITALY
(REFTEL A). THE ITALIAN DEFENSE MINISTRY IS SOLD ON THE
MILITARY BENEFITS, BUT NO ONE HAS CRITICALLY EXAMINED THE
INDUSTRIAL/ECONOMIC BENEFITS FROM THIS ONE BILLION DOLLAR GOI
INVESTMENT. ABSENT ANY SUCH CASE BEING MADE, THE PRESUMPTION
IN THE MINISTRY OF PRODUCTIVE ACTIVITIES IS THAT THE CASE
CANNOT BE MADE. AT THE SAME TIME, ALENIA AND FIAT AVIO
CONFIDENTIAL
PAGE 04 ROME 00620 01 OF 02 081322Z
OFFICIALS ARE TELLING THE GOI THAT THE DEAL IS NOT
SUFFICIENTLY ATTRACTIVE. GOI OFFICIALS BELIEVE THAT THE UK
SIDE LETTER OFFERED SUBSTANTIALLY BETTER TERMS FOR UK
INDUSTRY.
6. (C) NONETHELESS, CUZZONI NOW THINKS THAT A POLITICAL
DECISION IN FAVOR OF JSF IS LIKELY. HE BELIEVES THAT CIAMPI
AND ZAPPA WILL TRY TO DERAIL IT, BUT THAT BERLUSCONI WILL
DECIDE FOR JSF IN THE END. HE IS CONCERNED, HOWEVER, THAT
CIAMPI AND ZAPPA MIGHT CREATE A PARLIAMENTARY AND PUBLIC
PERCEPTION THAT THE PRIME MINISTER HAS SIGNED AN UNEQUAL
AGREEMENT WITH LITTLE ECONOMIC BENEFIT FOR ITALY IN TERMS OF
TECHNOLOGY, JOBS OR MONEY.
7. (C) COMMENT: ABSENT ANY INTERAGENCY PROCESS IN THE
INTERNAL ITALIAN DISCUSSIONS, THE MINISTRY OF DEFENSE HAS NOT
EXPLAINED, AND APPARENTLY CANNOT EXPLAIN, THE COST/BENEFIT TO
ITALY OF JSF PARTICIPATION. ZAPPA (AND POSSIBLY ALSO FIAT)
HAS ARGUED TIRELESSLY THAT THE DEAL IS BAD FOR ITALY.
DEFENSE MINISTRY OFFICIALS SIMPLY CONVEY THEIR ENTHUSIASM FOR
THE JSF. THE EMBASSY HAS TALKED TO OTHER MINISTRIES,
STARTING AT THE AMBASSADORIAL LEVEL, TO EXPLAIN THE POTENTIAL
BENEFITS, INCLUDING THOSE BEYONE ZAPPA'S ALENIA. CUZZONI
WAS, FOR EXAMPLE, COMPLETELY UNAWARE OF THE POTENTIAL FOR
CONFIDENTIAL
CONFIDENTIAL PTQ0267
PAGE 01 ROME 00620 02 OF 02 081244Z
ACTION EUR-00
INFO LOG-00 AID-00 ACQ-00 CEA-01 CIAE-00 COME-00 CTME-00
DOTE-00 SRPP-00 DS-00 EB-00 EXIM-01 E-00 FAAE-00
VC-00 FRB-00 H-01 TEDE-00 INR-00 ITC-01 L-00
AC-01 NSAE-00 NSCE-00 OES-01 OMB-01 OPIC-01 PC-01
PM-00 ACE-00 SP-00 SSO-00 SS-00 STR-00 TRSE-00
USIE-00 EPAE-00 SNIS-00 NISC-00 PMB-00 DSCC-00 DRL-02
G-00 SAS-00 /011W
-------------- 640625 081244Z /45
O 080915Z FEB 02
FM AMEMBASSY ROME
TO SECSTATE WASHDC IMMEDIATE 2027
INFO SECDEF WASHDC IMMEDIATE
C O N F I D E N T I A L SECTION 02 OF 02 ROME 000620
SIPDIS
DEFENSE FOR DEPSECDEF AND USD AT&L
E.O. 12958: DECL: 02/07/2012
TAGS: MARR EAIR PGOV PREL EAIR PGOV PREL IT ITMARR
SUBJECT: JSF/ITALY: POSITIVE OUTLOOK FOR MOU BUT ECONOMIC
CASE NOT MADE
FIAT AVIO TO PRODUCE ENGINE GEARBOXES FOR THE ENTIRE WORLD
JSF PRODUCTION RUN. HE EXPRESSED INITIAL DISBELIEF, THEN
RESPONDED THAT THIS WAS A GREAT BENEFIT AND WAS SURPRISED
THAT HE HAD NOT BEEN TOLD OF IT BEFORE. SIMILARLY, HE WAS
IMPRESSED WITH THE LIST OF POTENTIAL ITALIAN SMES WITH WHICH
CONFIDENTIAL
PAGE 02 ROME 00620 02 OF 02 081244Z
LOCKHEED MARTIN WAS CONSIDERING CONTRACTS.
SEMBLER
CONFIDENTIAL
>
2002ROME00620 - Classification: CONFIDENTIAL