Identifier
Created
Classification
Origin
05VIENNA331
2005-02-04 15:34:00
SECRET
Embassy Vienna
Cable title:  

AUSTRIA: SNIPER RIFLES TO IRAN: COMPANY HEAD

Tags:  PARM PREL ETTC AU 
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This record is a partial extract of the original cable. The full text of the original cable is not available.
S E C R E T SECTION 01 OF 03 VIENNA 000331 

SIPDIS

STATE FOR EUR/AGS, EUR/PRA, NP/ECNP

E.O. 12958: DECL: 02/04/2015
TAGS: PARM PREL ETTC AU
SUBJECT: AUSTRIA: SNIPER RIFLES TO IRAN: COMPANY HEAD
REMAINS HARD OVER

REF: STATE 9770 AND PREVIOUS

Classified By: AMBASSADOR W.L. LYONS BROWN. REASONS: 1.4 (B) AND (D).

S E C R E T SECTION 01 OF 03 VIENNA 000331

SIPDIS

STATE FOR EUR/AGS, EUR/PRA, NP/ECNP

E.O. 12958: DECL: 02/04/2015
TAGS: PARM PREL ETTC AU
SUBJECT: AUSTRIA: SNIPER RIFLES TO IRAN: COMPANY HEAD
REMAINS HARD OVER

REF: STATE 9770 AND PREVIOUS

Classified By: AMBASSADOR W.L. LYONS BROWN. REASONS: 1.4 (B) AND (D).


1. (S) Ambassador and DCM called on Ambassador Hans-Peter
Manz, the Chancellor,s diplomatic advisor, at Manz,s
request on February 2 to discuss the Steyr-Mannlicher sale of
sniper rifles to Iran (reftels). Manz said his government
wanted to avoid creating any wrong impressions in Washington:
the Austrians took the issue very seriously and the
Chancellor had been informed of the U.S. concerns and
requests for information and assurances. Although U.S. and
Austria views differed on the question of how best to promote
the emergence of a democratic and peaceful Iran, Manz said
the Austrian government clearly understood the U.S. concern
to protect coalition troops in Iraq.


2. (S) The Ambassador agreed that neither country wanted a
disruption in our relations, but said he wanted to leave no
doubt about the U.S.,s profound sensitivity to weapons
transfers to Iran. He outlined the sequence of U.S.
engagement with the Austrian government regarding the rifle
transfer; explained the U.S. legislation that could result in
sanctions against the GoA or Steyr-Mannlicher; and reiterated
our request for information on the sales and assurances the
Austrians would not allow future transfers. He told Manz that
the Austrians could expect intense U.S. interest in any sales
to Iran, especially but not only if weapons were involved,
and they could also expect us to protest vigorously any
transaction or overtures we found worrisome. The Ambassador
pointed out that he was still waiting for and expected a high
level authoritative answer to the questions he had presented
to the Interior Minister on January 17.


3. (S) Manz said that the ministries of Foreign Affairs,
Interior, and Economics had carefully scrutinized
Steyr-Mannlicher,s original application for an export
license when it was submitted about a year ago. The
company,s request totaled over two thousand sniper rifles.
The Iranian border guard was listed as the end user. The
Austrians agreed that that the weapons would be useful in
Iran,s efforts to control its porous borders, and the

transfer fit into Europe,s campaign to enhance Iran,s
anti-narcotics capabilities. The Austrian reviewers also
concluded, however, that 2000 weapons were too many for the
stated purpose and therefore restricted the license to only
800 rifles. They had also incorporated safeguards that Manz
claimed would make sure that the weapons went and stayed
where the Iranian end use certificate said they were to go
to.


4. (S) Turning to the U.S. request for information on the
serial numbers of the weapons already shipped, Manz said that
Austrian data privacy laws applied to the serial numbers.
Steyr-Mannlicher would have to waive these rights before the
numbers could be conveyed to the U.S. The Austrian
government had, however, been urging Steyr-Mannlicher to
agree to provide the serial numbers. Manz appeared confident
the company would hand over the list in a meeting scheduled
February 3 between the company president and representatives
of the U.S. Embassy and the Interior Ministry.


5. (S) On the issue of future transfers, Manz said flatly
that the government would not license the sale of more
rifles. (Note: see apparent discrepancy with statements of
Steyr-Mannlicher president, para 8 below). When pressed by
the Ambassador whether this constituted the official and
authoritative answer to one of the U.S. queries, Manz said
no; he expected the government to respond formally after
inter-ministerial consultations following the February 3
discussions with Steyr-Mannlicher.

--------------
MEETING WITH STEYR-MANNLICHER PRESIDENT
--------------


6. (S) EconPolCouns met with Steyr-Mannlicher president
Wolfgang Fuerlinger at the latter's request on February 3.
Two representatives attended from Austria's Federal Office
for the Protection of the Constitution and Anti-Terrorism
(BVT). Fuerlinger had asked to meet with Emboffs and
Austrian officials in order to respond to the U.S. request
for the number of sniper rifles already shipped to Iran,
their serial numbers, and a halt to all further shipments.


7. (S) Fuerlinger asserted that he was in full compliance
with Austrian law: he had applied for the appropriate export
permits and had received the requisite approval. Now the
U.S. was asking him to forego the Iran deal, which had
implications for future deals with Iran. Business with Iran
represented "by far" the largest part of his global business,
he said, and if we wanted him to give it up, he wanted
compensation. He said that the best way to compensate him
would be for the U.S. Army to select his new AUG-A3 assault
rifle in the ongoing acquisition process. He claimed the
specifications applied perfectly to his product, adding that
U.S. troops in Iraq had seen his AUG-A2 in the hands of
Australian troops and wanted the same thing. He said he
should win an open competition in any event. Fuerlinger said
that he would give us the quantity of weapons in Iran, the
serial numbers of those weapons, and access to all his files
regarding Iran contracts, as well as halt all future dealings
with Iran in exchange for "compensation" in the form of the
assault rifle contract.


8. (S) There was no legal obligation to provide the U.S.
with the number of weapons now in Iran or with their serial
numbers, Fuerlinger said. (Note: The GOA agrees that the
serial numbers are covered by Austrian data protection laws.
Manz told the Ambassador that the numbers of rifles shipped
was not covered. End note.) If he decided to do so -- which
he would do only in the context of the "deal" he was
proposing -- it would be entirely voluntary. Regarding the
numbers of weapons, he claimed the current contract -- which,
he said, was for more than 800 rifles -- represented some 20
percent of his total projected sale to Iran. Some 25-28
million euros in contracts remained. He said, however, that
the sniper rifle contract was only a small part of the entire
arms relationship he was developing with Iran. "If you don't
like the sniper rifles, you'll really hate what comes next,"
he said.


9. (S) The serial numbers presented a problem, he claimed,
because anyone could acquire one of the sniper rifles from a
legitimate source elsewhere in the world (they are available
in the U.S., Canada and Britain, he said). Fuerlinger
asserted it was "very easy" to erase and alter the serial
number because the numbers are laser engraved. If the
altered number of a weapon found in Iraq matched one of those
in Iran, he would then be in trouble. (Note: one of the
Austrian BVT officials who accompanied us told us later that
something similar had really happened with regard to other
Steyr-Mannlicher weapons in another country. End note.) He
said, however, that his company would respond "immediately"
to any request to verify the serial number of any weapon we
found in the wrong hands.


10. (S) Fuerlinger said he was well aware of U.S. law,
including the Iran Non-Proliferation Act. He said that in
terms of current orders, the Iran market was "ten times" as
large as his U.S. business. He would "much rather" do
business with the U.S., but if it came to a choice between
cutting off his business with the U.S. or cutting off his
business with Iran, he would choose to keep his business with
Iran. This might foreclose his long term prospects in the
west, he said, but he would then "close up shop and sell the
company."


11. (S) Fuerlinger, who has been the president of
Steyr-Mannlicher for five years, lamented how difficult it
was becoming to sell war materiel on the international
market. In the last five years, he said, Austria had made it
impossible to transfer technology. As a result, he had set
up shop in Malaysia in a joint venture with the Malaysian
state arms company. Fuerlinger maintained a 51 percent
share, and would make business decisions. (For instance, he
said that if the U.S. were to acquire the AUG-A3, he could
guarantee that no further business would go to Iran from
Malaysia or any of Steyr-Mannlicher's worldwide operations.)


12. (S) In a FAX to the Embassy delivered February 4,
Fuerlinger reiterated that Steyr-Mannlicher would not provide
the serial numbers. He also renewed his desire to obtain a
share of the U.S. market to compensate the company for a
withdrawal from the Iranian market. On the serial numbers,
he said,

"We cannot agree to the release of serial numbers for two
reasons:


1. Seriousness and confidentiality are central business
values which we hold in high regard in relation to all our
business partners.


2. Even the release of serial numbers could endanger our
business relationships with the referenced customer as well
as with clients in the entire region. The consequences for
the well-established Steyr Mannlicher and its employees would
be incalculable."

Fuerlinger goes on to note that the region is the primary
source of contracts, which was the reason for the
establishment of a production facility in Southeast Asia. He
says that this is because the U.S. government has put
barriers to the company's products, citing an import "ban" on
the Steyr AUG assault rifle. He complains that the company
has received no support for its efforts establish a factory
in the U.S. He concludes,

"Finally, we would like to stress once more that we are
extremely interested in fair access to the U.S. market. In
the U.S., our product line, which is in heavy demand, would
certainly put us in a position to compensate for a possible
withdrawal of our company from the Middle Eastern market."

--------------
COMMENT
--------------


13. (S) In his discussion with the Ambassador, Manz
indicated he expected the company to surrender the serial
numbers (note: Amb. Hans Winkler, deputy Secretary General
of the Foreign Ministry, suggested the same to the Ambassador
last week. End note.) The GOA is on the hook to get back to
the Ambassador with a final response to the demarche.
Ambassador intends to give them a brief period to digest or
turn around the disappointing results of the Fuerlinger
meeting but will press Manz again next week.
Brown