AIRCRAFT CONTRACT RUMORS RESURFACE (U)

C O N F I D E N T I A L CARACAS 003031 SIPDIS NSC FOR CBARTON HQSOUTHCOM FOR POLAD E.O. 12958: DECL: 09/22/2014 TAGS: PGOV VE SUBJECT: AIRCRAFT CONTRACT RUMORS RESURFACE (U) REF: IIR 6 902 9829 04 Classified By: POLITICAL COUNSELOR ABELARDO A. ARIAS FOR 1.4 (D) -------------- Summary -------------- ¶1. (C) A 10 September newswire reporting Venezuela's alleged interest in procuring Russian jet fighters has renewed media speculation that the two countries may be close to an arms deal. Chavez has already purchased Russian helicopters, according to DAO and press reports. Although he is seeking to reduce the military's dependency on US-based weapons systems, Chavez is unlikely to conclude the fighter contract in the near term, and we should not take steps that encourage him to do so. End summary. -------------- Rumors and Offers -------------- ¶2. (C) On 10 September, a UPI newswire detailing Venezuela's plans to acquire MiG-29 fighters prompted additional press rumors over the status of a possible deal between Venezuela and Russia that has resurfaced every several months since late 2001. The press reports cite US, European, and Latin American military intelligence officials. In sharp contrast to Russia's 2001 proposal, which outlines a nearly USD two billion offer, the reports describe the contract as worth USD five billion. Details about the materiel and support Russia is to provide, however, are roughly consistent with the 2001 offer. Both reports mention the purchase of 40 one-seat MiG 29s, 10 two-seat MiG 29s, and training and maintenance for the planes. ¶3. (C) Press reports also cite a contract to buy MI-17 helicopters from Russia and radar systems from China. On 22 September, Chavez confirmed he had bought Russian helicopters to help patrol the Colombian border after a 17 September ambush claimed the lives of five Venezuelan soldiers (SEPTEL). DAO reporting (REFTEL) suggests this deal may include a package of MI-17, MI-35, and MI-26 helicopters for USD 190-450 million. According to MILGROUP, the negotiations for Chinese radar have collapsed. -------------- Comment -------------- ¶4. (C) Although Venezuela's signed contracts sometimes fall apart, the GOV appears to have purchased Russian helicopters. Any deal on MiGs, however, will probably take longer to ink. Acquiring Russian fighters would involve a shift in technology, maintenance, and training for which the FAV is unprepared. Moreover, buying MiGs would also alienate Chavez's US-trained F-16 squadron and give his opposition fodder to condemn government waste. The GOV, which has counter-offered in the past with ill-defined joint ventures and barter deals for Venezuelan aluminum and petroleum, will remain reluctant to pay the up-front cash required by Moscow. Even spread out over several years, a USD 2-5 billion purchase would put a severe dent in Venezuela's budget. ¶5. (C) The logistical and practical details notwithstanding, Chavez is seeking a way to free Venezuela from reliance on US training and parts. He may view buying a new fleet of fighters from Russia as an easy solution to his decaying F-16 squadron. According to MILGROUP, only six of the 21 remaining F-16s in the Venezuelan fleet are fully mission capable, while a proposed US overhaul of the F-16 squadron remains on hold. ¶6. (C) For our part, we should avoid tilting the balance in favor of a MiG deal by default. The symbolism of purchasing from a US strategic adversary cannot be overemphasized. By buying Russian or Chinese systems, Chavez aims to distance Venezuela not only from "imperialist" weaponry, but also from the US military in general. If this is to be the case, then we should ensure that it is the result of a decision clearly attributable to Chavez and the GOV, not us. Brownfield NNNN 2004CARACA03031 - CONFIDENTIAL