(S) MTAG: ADDITIONAL GOI REACTION TO POTENTIAL

S E C R E T ROME 000695

SIPDIS


NOFORN

STATE FOR NP/CBM, EUR/PRA, EUR/WE, EAP/CM, PM/DTC (GANZER)

E.O. 12958: DECL: 03/01/2015
TAGS: ETTC PARM PREL IT CH MTCR EXPORT CONTROLS
SUBJECT: (S) MTAG: ADDITIONAL GOI REACTION TO POTENTIAL
ITALIAN COMPANY ACTIVITY IN CHINA

REF: A. FEBRUARY 18 GANZER-FINKBEINER EMAIL MESSAGE

B. ROME 117

C. 04 STATE 275541

Classified By: Economic Minister Counselor Scott Kilner for reasons 1.4
(b),(d) and (h)


1. (S) Ref B reports on the delivery of our January 13
demarche (ref C) to the MFA's Non-Proliferation Coordinator
Carlo Tripepi, in which we informed the GOI that several
Chinese firms intended to engage in proliferation-related
activity with several Italian firms, including Galileo
Avionica, Sicam, Alenia, Marconi Selenia, and FLT. Our
demarche noted in particular our concern regarding China's
efforts to develop unmanned aerial vehicle (UAV) technology.


2. (S) Alfredo Cuzzoni, Director of the Office for Armaments,
Military Sales, and the Aerospace Defense Industry in the
Ministry of Productive Activities (MPA),followed up on the
demarche in a letter faxed directly to the Office of Defense
Trade Controls in the State Department,s Bureau of Political
Military Affairs on February 17 (ref A). Cuzzoni noted in his
letter that the MPA had reminded Italian industry of the need
to respect both national and multilateral controls on the
transfer of armaments and dual-use technology and materials.
Cuzzoni requested a meeting with econoff on February 22 to
further explain his letter, and to give us a hard copy of the
letter (which we will forward to PM/DTC).


3. (S) While continuing to encourage increased commercial
ties between Italy and China, Cuzzoni told us that the GOI is
also maintaining its vigilance regarding the potential
transfer of high technology aerospace material. Cuzzoni,
whose office promotes the Italian aerospace industry, told
econoff that, since becoming aware of our January 13
demarche, he had contacted several Italian firms, including
Alenia Aeronautica, Galileo Avionica, and Marconi Selenia, to
reiterate their need to comply fully with export license
requirements. Notwithstanding recent high profile engagement
with the Chinese government to promote commercial ties (such
as Italian President Ciampi,s December 2004 state visit to
China),Cuzzoni said the GOI continued to view the
maintenance of strong commercial relations with the United
States on aerospace as of paramount importance. He mentioned
specifically the Italian hopes for enhanced cooperation in
the area of communications satellites. Cuzzoni expressed
concern that some GOI officials (he specifically mentioned
MPA Under Secretary Valducci) were overly optimistic
regarding the attractiveness of the Chinese market, at least
with regard to high technology goods that require export
licenses and that, depending on the technology, would not in
all cases be approved.


4. (S) Comment: Cuzzoni expressed familiar GOI concerns
during our meeting regarding the dilemma faced by a
struggling Italian aerospace industry -- the attractiveness
of the Chinese market, but the risk that such cooperation
could impede current and future business with U.S. partners.
Cuzzoni stressed his ties to Italian industry and his
willingness, even eagerness, to work with the Embassy to
avoid misunderstandings. Econoff explained that the Embassy
had to deliver such sensitive messages to the MFA
Non-Proliferation Coordinator, given his role overseeing
Italy's Inter Ministerial Consultative Committee on Dual-Use
Export Controls. We agreed, however, that further direct
contact with Cuzzoni on similar issues could be helpful in
making our concerns more broadly known within the GOI. End
comment.

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2005ROME00695 - Classification: SECRET