ROUND 2: BOEING VS. AIRBUS: AMBASSADOR DISCUSSES

C O N F I D E N T I A L SANAA 003198

SIPDIS

USDOC - PASS TO ADVOCACY CENTER/CHRISTOPHER JAMES. HELSINKI
- PASS TO FCS/ROBERT PEASLEE. RIYADH - PASS TO FCS/NANCY
CHARLES-PARKER. DUBAI - PASS TO FCS. USDOC - PASS TO
ITA/TYLER HOFFMAN. STATE - PASS TO USTR/JASON BUNTIN.

E.O. 12958: DECL: 11/01/2015
TAGS: EAIR ECON KTDB YM ECON COM
SUBJECT: ROUND 2: BOEING VS. AIRBUS: AMBASSADOR DISCUSSES
10-PLANE DEAL WITH PRESIDENTIAL CHIEF OF STAFF

REF: A. SANAA 3032

B. JEDDAH 4638

Classified By: Ambassador Thomas C. Krajeski for reasons 1.4 (b) and (d
)


1. (C) Summary: Ambassador met with Director of President
Saleh's Office, Ali Al-Anssi, on October 29 to discuss the
upcoming 10-plane purchase by Yemenia Airlines, the national
airline of Yemen. As President Saleh's chief of staff,
Al-Anssi is considered an influence broker with the
President. Boeing and Airbus have lobbied extensively with
Yemeni decision-makers at all levels. Al-Anssi confirmed
that the French, German, and British ambassadors have
approached him on this matter. Ambassador emphasized the
merits of a partnership with Boeing Airlines with Al-Anssi,
as a followup to his October 16 meeting with Captain
Abdulkhalid Al-Qadi, Chairman of Yemenia Airlines. End
Summary.


2. (C) Al-Anssi opened the meeting by noting that he "expects
significant results" during the President Saleh's upcoming
visit To Washington. He also noted, "there are a lot of
sensitive issues." The Ambassador highlighted the
constructive aspects of the visit, saying: "The fact that the
two presidents can talk to each other is an indication of how
strong the relationship is. We hope the visit will be a
platform for future cooperation."


3. (C) As an example of that constructive engagement,
Ambassador outlined the benefits that Boeing could bring to
its working relationship with Yemenia Airlines. Al-Anssi
agreed and felt that the long term financial benefits of a
Boeing purchase could outweigh those of an Airbus purchase.
He noted that Airbus undertook the risk of entering the
Yemeni market before others, hitting upon a common note heard
in Yemeni government circles. (COMMENT: When international
businesses entered the high-risk markets of Yemen while
others hesitated, the Yemenis have repaid those companies
with loyalty over a significant period of time.)


4. (C) Al-Anssi went on to emphasize a favorable financing
package from Airbus, though Ambassador argued that Boeing's
Exim-financed package was just as compelling an offer. The
Ambassador encouraged the President to allow the technical
experts to make a judgement on the merits of the technical
and financial package. Al-Anssi agreed on the value of
transparency in this matter and said, "we cannot direct them
(the technical experts) to make a decision, but we have
recommended to them to look at the issues of quality and
relationships (with the manufacturers)." He even noted that
before Al-Qadi's trip to Jeddah (ref A),he contacted the
Cabinet on this issue and advocated to this effect. He also
attested to advising the President on this matter, who then,
said Al-Anssi, instructed Yemenia officials to decide based
on the merits of the deal.


5. (C) COMMENT AND CONCLUSION: The President and his advisors
will often say the "right things" on transparency or policy
to USG officials, but not follow through on these
commitments. They claim that the Yemenia deal will hinge on
technical and financial grounds and Boeing so far has the
edge on both counts. Whether or not other, less than
transparent factors intervene remains to be seen.
Krajeski