Identifier
Created
Classification
Origin
06ISLAMABAD17768
2006-09-07 02:26:00
CONFIDENTIAL//NOFORN
Embassy Islamabad
Cable title:  

SEPTEMBER 9 F-16 SIGNING DOUBTFUL

Tags:  PK PREL MOPS UN MARR 
pdf how-to read a cable
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FM AMEMBASSY ISLAMABAD
TO RUEHC/SECSTATE WASHDC PRIORITY 9826
INFO RUEHTA/AMEMBASSY ALMATY PRIORITY 9589
RUEHAH/AMEMBASSY ASHGABAT PRIORITY 1097
RUEHEK/AMEMBASSY BISHKEK PRIORITY 3793
RUEHLM/AMEMBASSY COLOMBO PRIORITY 0899
RUEHKA/AMEMBASSY DHAKA PRIORITY 1627
RUEHDBU/AMEMBASSY DUSHANBE PRIORITY
RUEHBUL/AMEMBASSY KABUL PRIORITY 6138
RUEHKT/AMEMBASSY KATHMANDU PRIORITY 7034
RUEHNE/AMEMBASSY NEW DELHI PRIORITY 9217
RUEHNT/AMEMBASSY TASHKENT PRIORITY 1781
RHEHNSC/NSC WASHDC PRIORITY
RUCNDT/USMISSION USUN NEW YORK PRIORITY 5761
C O N F I D E N T I A L SECTION 01 OF 02 ISLAMABAD 017768 

SIPDIS

NOFORN
SIPDIS

DEPT FOR P, EUR, NEA, PM, IO

E.O. 12958: DECL: 09/05/2016
TAGS: PK PREL MOPS UN MARR
SUBJECT: SEPTEMBER 9 F-16 SIGNING DOUBTFUL

Classified By: CDA Peter W. Bodde, Reasons 1.4 (b) and (d)

C O N F I D E N T I A L SECTION 01 OF 02 ISLAMABAD 017768

SIPDIS

NOFORN
SIPDIS

DEPT FOR P, EUR, NEA, PM, IO

E.O. 12958: DECL: 09/05/2016
TAGS: PK PREL MOPS UN MARR
SUBJECT: SEPTEMBER 9 F-16 SIGNING DOUBTFUL

Classified By: CDA Peter W. Bodde, Reasons 1.4 (b) and (d)


1. (C) Summary: GOP sources told Office of Defense
Representatives Pakistan (ODRP) September 6 that
the scheduled September 9 signing of the F-16 LOA
would not happen. The same day, MODP
(Ministry of Defense Production) sent ODRP a memo
requiring an unspecified per-plane price cut; significant
(USD 800-900) off-sets; better financing terms via
the USG; and changes in the payment schedule. MG
Helmly met with senior PAF and MOD officials September 5.
He impressed upon his interlocutors the importance of
meeting the September 15 signing deadline. End Summary


2. (C) On September 5, post learned that the planned
September 9 signing of the LOA for Pakistan's purchase
of eighteen F-16s was in peril. MG Helmly, ODRP,
promptly met with Air Chief Marshall Tanvir, who
told him that the PAF still wanted to go forward
with the F-16 purchase but that "the ball was in MODP's
(MOD Purchase's) court." Tanvir noted it was
increasingly unlikely the LOA would
be signed by the contracted September 15 offer
expiration date. On September 6,MODP verbally
informed ODRP that the ceremony would not occur
on September 9th. It also sent a written request for an
extension of the September 15 offer expiration date to
December 31 2006.


3. (C) In its September 6 written request to
ODRP, MODP requested unspecified per-plane price
reductions. It also asked for offsets from Lockheed
Martin equaling USD 800-900 million - 30 percent of
the value of the program. During his September 5 meetings,
MG Helmly had noted that the contract
had been negotiated at a very low per-plane cost.
LM had not planned for major off-sets or financing
challenges. He also reminded interlocutors that MOD/P had
been represented at the contract negotiations with LM.


4. (C) MODP also requested improved
terms of financing and changes in payment schedules.
The PAF separately told ODRP it would seek "assurances"
on matters such as delivery schedules and security
requirements.


5. (C) MG Helmly stressed that timing was crucial.
If the GOP did not sign the LOA by September 15,
the USAF could not complete contract negotiations
with LM by 30 November, which in turn would force
LM to shut down F-16 production due to lack of
orders. At the very least, the GOP would then face
a USD 39 million increase in contract price.


6. (C) Interlocutors told MG Helmly that President
Musharraf had promised the Finance Ministry to raise
the F-16 issue with President Bush during their
upcoming bilateral. ODRP notes that MODP is aware
that the USG cannot fund off-sets, as they involve
an agreement between the vendor and the GOP to which
the USG is not a party. A Lockheed
Martin VP arrived in Islamabad September 6 to meet
with GOP officials.


7. (C) Comment: The GOP's recent experiences
with procurement deadlines might lead them to
believe that all deadlines are flexible. We have
repeatedly explained that missing the September 15
offer expiration date (OED) will result in significant
added costs for the GOP -- costs which the USG
is unable to cover. We believe that the Ministry of
Defense Production has not understood the
limitations of Lockheed Martin's price flexibility
nor the constraints on the USG's ability to
influence the final price or offset any additional
costs caused by the GOP's indecision. ODRP is meeting
with MODP on September 7 to reinforce the importance of
the September 15 date.

ISLAMABAD 00017768 002 OF 002





BODDE