AFTER BLOCKING SALE TO IRAN, ITALIAN MANUFACTURER

S E C R E T ROME 000017

SIPDIS

E.O. 12958: DECL: 12/31/2010
TAGS: ETTC PARM PREL IR IT EXPORT CONTROLS
SUBJECT: AFTER BLOCKING SALE TO IRAN, ITALIAN MANUFACTURER
SEEKS USG HELP SELLING FAST BOATS IN U.S. MARKET

REF: A. ROME 1591 AND PREVIOUS

B. SECSTATE 56208 AND PREVIOUS

Classified By: Acting EcMin Kathleen Reddy for reasons 1.4 (b) and (d)


1. (U) This is an action request, see paragraph 7.


2. (SBU) Summary. Acting on instructions from Trade Vice
Minister Adolfo Urso, Director General for Commercial
Agreements Amadeo Teti called on Acting EcMin December 27 to
seek USG assistance in finding U.S. buyers for fast boats
manufactured by the Italian company Fabio Buzzi Design ("FB
Design"). Teti will also contact the Italian Embassy in
Washington to request that they help FB Design enter the U.S.
market. End summary.


3. (S) Teti began by saying that in February 2004, the
Ministry of Productive Activities (MPA) blocked the export to
Iran of a fast boat built by FB Design. The boat was the
last in a series of 14-15 fast boats purchased by Iranian
government entities from FB Design. He noted that fast boats
are not covered by any multilateral export regime, including
the Wassenaar Arrangement, and that the GOI took the
extraordinary step of acting on its own authority both to
block the export and to arrange for the Guardia di Finanza
(Italy's financial police) to purchase the boat. (FB
Design's only loss was a 776 euro performance bond forfeited
when the firm failed to deliver the final boat.) Teti
alleges that the firm is now suffering financial problems,
possibly due to the loss of its Iranian market.


4. (S) Since February, FB Design has pressed MPA to help
the firm gain entry into new markets to compensate for the
loss of sales to Iran. Teti, again on instructions from MPA
Trade Vice Minister Urso, asked if the USG could help FB
Design find U.S. customers for either the FB Design's leisure
or patrol boats. In addition to contacting Embassy
officials, Urso will write to Italian Ambassador to the
United States Castellaneta, to ask that the Italian Embassy
also assist FB Design.


5. (S) Comment. Although it moved slowly and stopped the
export of only one boat, the GOI went outside its standard
operating procedure to stop the export of the final fast boat
to Iran because the GOI finally accepted the boats' potential
threat to coalition forces. Teti would not be pinned down on
whether FB Design wished to market its vessels as patrol
boats or pleasure craft, but did say that the boats' high
speed (reportedly as much as 70 knots/80 miles per hour)
meant the boats would be most interesting to the military.
According to FB Design's website (www.fbdesign.it),the
company has previously sold boats to the U.S. Customs Service
as harbor patrol craft and, we understand, the Turkish Coast
Guard. Teti promised to provide us soon with the boats'
specifications, though many of them are available on the FB
Design website.


6. (S) Comment continued. It was interesting that neither
Teti, nor probably FB Design in its earlier conversations
with Teti, referred to the export from Norway to Iran of fast
boats manufactured by Batservice A/S or to the boats'
manufacture on Kish Island. As Ref A illustrates, differing
political and economic considerations often mean that not all
governments are able to stop similar exports.


7. (U) Comment continued and action requested. While the
GOI request that the USG help an Italian company enter the
U.S. market is unusual, GOI efforts to stop the shipment of
the last boat, we believe, merit our consideration, even just
to positively reinforce the GOI's cooperation on an export
not covered by a multilateral regime. Post requests the
Department consider assisting the Italian Embassy in helping
identify for FB Design possible customers for its fast boats.
As a first step, the Department may wish to consider
contacting the economic/commercial sections(s) of the Italian
Embassy with two/three names of possible customers and let
the Italian Embassy follow up with these customers itself.
(Teti advised us that with that alone, the GOI would consider
that we -- and the GOI -- had done enough to compensate the
firm for the loss of the Iranian market.) End comment and
action request.
BORG