CROWN PRINCE SIGNS TWO DEFENSE AGREEMENTS IN

S E C R E T SECTION 01 OF 02 RIYADH 005907 SIPDIS SIPDIS E.O. 12958: DECL: 07/18/2016 TAGS: MARR MASS BEXP SA SUBJECT: CROWN PRINCE SIGNS TWO DEFENSE AGREEMENTS IN PARIS--BUT NO NEW CONTRACTS REF: A. A: RIYADH 5450 ¶B. B: JEDDAH 0481 ¶1. (C) Crown Prince Sultan, who is also the Saudi Minister of Defense and Aviation, reportedly signed two defense agreements with France during his July 20 visit to Paris. Media reports have suggested that these agreements could lead to Saudi purchase of French tanker aircraft, helicopters, and other equipment. However, Embassy contacts report that no new deals were finalized, and Saudi purchase of French military hardware remains uncertain. A July 24 article in Paris La Tribune notes "the disappointment felt by certain industrialists who were expecting a great deal more from the visit." One of the agreements signed was reportedly a technical addendum to a 1982 KSA-France defense cooperation agreement. -------------- REFUELING AIRCRAFT: BOEING VS. AIRBUS -------------- ¶2. (C) A Boeing representative told Emboffs on July 23 that the signed agreements did not yet commit the SAG to purchase Airbus-330 refueling tankers, instead of the Boeing-767 configuration. He said that according to his contacts within the Ministry of Defense and Aviation (MODA),the SAG might sign a contract by the end of 2006 for the purchase of three Airbus tankers, but that is not a given. In the meantime, Boeing intends to urge the SAG to delay its decision on the tankers until after the USAF has decided which tanker aircraft it will purchase. ¶3. (C) The Boeing representative also said that the agreements signed in Paris establish several "phases" for Saudi-French defense cooperation. The first phase apparently covers the purchase of tankers and helicopters, with subsequent phases to possibly include tanks, ships, and the Rafale fighter aircraft. -------------- HELICOPTERS -------------- ¶4. (C) A representative of Sikorsky Aircraft, which is also competing against France for Saudi business, told Emboffs that the agreements did not appear to be "threatening." Noting that the SAG had recently agreed to purchase 12 of Sikorsky's Schweizer-333 training helicopters and the Bush administration's recent approval to sell the SAG 24 Blackhawks, the Sikorsky representative commented, "we're on a roll." (Comment: In May 2006, France had reportedly discussed with the SAG the sale of Super Puma search and rescue helicopters (Ref A). Sikorsky Aircraft's S-92 helicopter appears to be the only competitor to the Super Puma that the SAG is considering. End Comment.) -------------- FRENCH AMBASSADOR DOWNPLAYS ANTICIPATED DEALS -------------- ¶5. (U) On July 18, prior to the Paris meeting, French Ambassador to Saudi Arabia Charles D'Aragon reportedly told Al-Hayat newspaper that the main objective of the Crown Prince's trip was not to discuss defense contracts, but was to talk about regional issues, particularly Lebanon. The French Ambassador also denied that President Chirac walked away from his March visit to Riyadh empty handed. He told Al-Hayat that the anticipated defense deal "was not refused by the Saudis, but was only postponed, which means that there is an approval in principle." -------------- COMMENT -------------- ¶6. (S) While details of the two agreements that the Crown Prince signed in Paris are still emerging, it appears that--as was the case during Chirac's March visit to the Kingdom--the French have again failed to secure any new contracts with the SAG. The French Ambassador's statements just before the visit downplayed some of the high expectations within the defense industry. Nevertheless, the U.S. defense contractor community as a whole remains concerned that France is poised to sign several major deals RIYADH 00005907 002 OF 002 with the SAG (Reftels). ¶7. (S) The two U.S. contractors (Boeing and Sikorsky) that appear to be most immediately affected by the Paris agreements appear to have gained some time to continue lobbying the SAG to buy American. In that regard Post has received a signed letter from Commerce Secretary Gutierrez to Crown Prince Sultan endorsing Boeing's bid for the tanker deal. Post will deliver the letter to the Crown Prince once he returns to the Kingdom. End Comment. OBERWETTER