Identifier
Created
Classification
Origin
03ROME3178
2003-07-11 15:20:00
CONFIDENTIAL
Embassy Rome
Cable title:  

ITALIAN INDUSTRY MINISTRY HOPES TO EASE TECH

Tags:  ETTC PARM PREL IT EXPORT CONTROLS 
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This 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 ROME 003178 

SIPDIS


DEFENSE FOR U/S WYNNE (ACQUISITIONS);
COMMERCE FOR BIS U/S JUSTER;
USDOC 4220/MAC/EUR/DDEFALCO;
STATE FOR PM DAS MAGGI AND FOR T;

E.O. 12958: DECL: 07/09/2013
TAGS: ETTC PARM PREL IT EXPORT CONTROLS
SUBJECT: ITALIAN INDUSTRY MINISTRY HOPES TO EASE TECH
TRANSFER RULES AT JULY 22 TALKS; AIRS COMPLAINTS ABOUT
LOCKHEED-MARTIN

Classified By: Acting Deputy Chief of Mission Scott Kilner for reasons
1.5 (B) and (D).

C O N F I D E N T I A L ROME 003178

SIPDIS


DEFENSE FOR U/S WYNNE (ACQUISITIONS);
COMMERCE FOR BIS U/S JUSTER;
USDOC 4220/MAC/EUR/DDEFALCO;
STATE FOR PM DAS MAGGI AND FOR T;

E.O. 12958: DECL: 07/09/2013
TAGS: ETTC PARM PREL IT EXPORT CONTROLS
SUBJECT: ITALIAN INDUSTRY MINISTRY HOPES TO EASE TECH
TRANSFER RULES AT JULY 22 TALKS; AIRS COMPLAINTS ABOUT
LOCKHEED-MARTIN

Classified By: Acting Deputy Chief of Mission Scott Kilner for reasons
1.5 (B) and (D).


1. (C) Summary: On July 8, Ministry of Productive Activities
(MPA, i.e. Industry) U/S Mario Valducci met with ECMIN to
discuss the possibility of easing U.S. export controls on
technology to Italy, in the context of Italy's strong
political support for the U.S., particularly during the
recent Iraq war. Valducci also aired complaints about
Lockheed-Martin. He noted that, during his June visit to
Washington, he had made similar requests of DOD U/S Wynne,
Commerce U/S Juster and State U/S Bolton. Valducci believed
that he had been received with understanding in Washington
and had established a political level dialogue that would
lead to the transfer of more sophisticated technology to
Italy. The planned July 22-23 visit of State DAS Turk Maggi
to Rome, said Valducci, would permit more in-depth
discussions and, he anticipated, significant progress toward
greater/improved tech transfer. Valducci planned to present
Maggi with a list of 22 technologies, which the Government of
Italy would request be transferred in the near future. ECMIN
explained the genesis of the Maggi delegation visit and
stressed the limited focus on dual-use export controls. He
also explained the complexities of the USG interagency
process. Nevertheless, post believes that Valducci and
perhaps others in the GOI have unreasonably high expectations
for Maggi's visit and the July 22-23 talks. We would suggest
planning for side discussions with Valducci on this issue,
perhaps on July 21. End Summary.


2. (U) U/S Valducci (Ministry of Productive Activities) met
with ECMIN and other Mission officers, including the Acting
Chief of the Office of Defence Cooperation, on July 8.
Valducci was joined by DG Goti, Deputy DG Cuzzoni, Dip
Advisor Checchia, and Chief of Staff Raimondi. Valducci had
requested the meeting to follow up on his meetings during his
June visit to Washington.


3. (C) Valducci explained that Italy had long been an

extremely close U.S. ally. During the recent Iraq war, the
Berlusconi government had faced down political and public
opposition in order to support the U.S. Italy's EU partners
continually complained that Italy too often chose U.S. rather
than EU weapons systems. The decision to pull out of the
A400M program, as well as other pro-U.S. choices, has meant
increasing pressure from France and other EU states. Yet
the GOI felt it had not received credit for this from the
USG. Italy saw itself left out of the top echelon of allies
in terms of technology transfer. The French, Cuzzoni
alleged, were given access to U.S. technologies denied to
Italy. All Italy was asking, he said, was to be treated as
well as America's other major European allies. At the
moment, the French were beginning a major new program (NFI),
and pressing the Italians to enter. Italy would prefer to
work with the U.S., but found itself treated as an outsider.


4. (C) Valducci recounted that he had visited Washington in
June, and met with U/S Wynne of DOD, U/S Juster of DOC and
U/S Bolton of State. He had also met with Rep. Curt Weldon,
House Appropriations Committee Chairman Young and Sen. Ted
Stevens. These meetings had given Valducci an opportunity to
explain Italy's need for increased technology transfer from
the U.S. Valducci felt that he had been heard and
understood, and that he had established a political dialogue
that would result in an easing of export controls on
technology transfer to Italy. He noted that U/S Bolton had
mentioned legal restrictions, but Valducci believed that
these could be resolved via a high level political agreement.
The next step, he argued, would be the visit of State DAS
Turk Maggi to Rome on July 22-23 for bilateral discussions.
Valducci would participate in the MFA discussions and
planned also to meet separately with Maggi to discuss the
transfer of 22 specific technologies. A list would be
provided to Maggi. (Note: Embassy requested a copy of the
list at the meeting, but has not received it.)


5. (C) DG Goti asked whether DAS Maggi could personally
approve the transfer of such technologies to Italy. ECMIN
responded that the system was far more complicated. While
Maggi was a key person for the State Department, the export
control process included several departments. Moreover, the
U.S. did not have category A, B, or C allies, each of which

was approved access to broad categories of specified
technologies. Rather, specific requests were treated on a
case-by-case basis, depending on how the narrowly defined
technology was to be used, whether it might be re-exported
and many other criteria. The most successful strategy for
Italy would be to take one specific case at a time and
request approval through proper channels, rather than making
a wholesale request.


6. (C) Goti responded that he was willing to explain to
Maggi GOI intentions for all 22 technologies, and accept his
limitations on the use and/or re-export of each. The
important thing, stressed Goti, was to get all 22
technologies quickly -- not in three or four years, when it
would be too late. (Comment: The MPA, on behalf of Italian
industry, appears to be looking for a political level
agreement that would significantly streamline procedures and
shorten the time frame associated with individual tech
transfers. End Comment.)


7. (C) ECMIN reiterated that a broad request was unlikely to
be approved. He clarified for Valducci that the July 22-23
meetings at the MFA had been set up for a different -- albeit
related -- purpose. The discussions had arisen out of
concerns expressed by the USG regarding some sensitive
exports to third countries, especially China. These
discussions are an effort to establish a transparent and open
dialogue between our two governments on how export controls
are applied and how we can work together. If we can move
toward a common understanding on how to deal with sensitive
technologies, this would be an important first step toward
closer defense-industrial cooperation.


8. (C) Valducci went on to explain that, in discussions with
Rep. Weldon, a proposal had emerged for a two-day U.S./Italy
aerospace workshop in Washington in the fall of 2003 or
spring of 2004. All Italian defense companies would be
represented, and it would allow Italy to show that -- aside
from close political ties -- Italy cooperates closely with
the U.S. in defense and industrial areas. ECMIN asked if
this proposal had been discussed with any of the Executive
Branch officials he had met. Valducci thought not. He
believed, however, that Ambassador Vento had discussed it
with U/S Bolton in recent days. Valducci added that the
workshop had the support of the Italian defense and research
ministers.

Lockheed Martin and JSF


9. (C) The other issue raised by Valducci during this meeting
was his sense that Lockheed Martin had not met Italy's
expectations as a partner in JSF or in earlier projects.
While Boeing had been an excellent partner and met all its
commitments, LM had continually disappointed the GOI.
Valducci referred to the C27J program, arguing that LM had
done nothing to sell the product, leaving Italy to do it all.
Italy hoped to sell the C27Js to the Coast Guard deep water
program or to the U.S. national guard, but nothing was
concluded. LM was late on meeting its offset commitments for
the C130J program. The offset was to be 50 percent over 14
years, but LM had only complied with 33 percent to date.


10. (C) Italy was committed to JSF, stressed Valducci. As a
level two partner, the GOI was putting one billion dollars
into the program, and saw itself as a real partner in this
effort. However, LM didn't seem to have the same view. LM,
he charged, did not seem at all interested in using Italian
industry in the JSF program, despite early promises. While
countries such as Canada, that would not even commit to
buying JSF, had reportedly earned a 67 percent return on
investment, and the Netherlands had reportedly gotten 45-50
percent return, Italy had seen no more than a 24 percent
return. Of course, noted Valducci, these figures were press
reports, because LM does not provide any information to the
Ministry of Productive Activities. (Note: LM deals only
with the Ministry of Defense on JSF, at the insistence of the
National Armaments Director Adm. Di Paola.)


11. (C) Valducci and Cuzzoni both emphasized that Italy was
coming close to another key decision point on JSF
participation (not further identified),and that LM's
disappointing performance might be a factor in this decision.

While Adm. Di Paola had, according to Goti, persuaded LM to
promise some additional contracts would be given to Italian
firms, no results had yet been seen. Goti added that "We
want to continue with JSF and with the United States. Help
us to help you." He asked that the USG press LM to treat
Italian firms more fairly.

Comment:


12. (C) We have found that GOI officials in other Italain
ministries (MFA, MOD and MOI, as well as some in the MPA)
have a more realistic understanding of U.S. tech
transfer/export control processes than that expressed by
Valducci. Despite our efforts to dampen expectations,
Valducci (perhaps under the influence of para-statal
Finmeccanica -- septel) appears to maintain unrealistic views
regarding the Maggi visit and the July 22-23 discussions. We
recommend that DAS Maggi consider separate meetings at the
MPA.


14. (C) On the JSF/Lockheed issue, the MPA will have a major
voice in any new funding decisions for JSF, as does Adm. Di
Paola. The JSF program decision to give certain sole source
contracts to strategic partners, including Italy, may be a
first step in meeting the GOI's concerns. However, the total
lack of contact between LM and the MPA on JSF has caused a
shaky relationship to deteriorate further. The Embassy will
work to provide reliable and complete information on the JSF
program to MPA officials as they evaluate their next steps.
Sembler
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2003ROME03178 - Classification: CONFIDENTIAL