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