CZECH GOVERNMENT REPLY ON LICENSE FOR MILITARY

S E C R E T PRAGUE 000569 SIPDIS NOFORN SIPDIS E.O. 12958: DECL: 05/18/2017 TAGS: PREL MARR PARM VE EZ SUBJECT: CZECH GOVERNMENT REPLY ON LICENSE FOR MILITARY AIRCRAFT TO VENEZUELA REF: STATE 62690 Classified By: Ambassador Richard W. Graber for reasons 1.4 b+d ¶1. (U) Action request in para 7-8. ¶2. (S/NF) Summary: Ambassador raised USG concerns about pending Czech government decisions to license the lease of military aircraft by Venezuela (reftel) with Prime Minister Mirek Topolanek on May 17. DCM had raised our concerns with Deputy Foreign Minister Tomas Pojar on May 10. Both said the Czech government appreciates USG concerns about the Chavez regime's military build-up and growing links with Iran. Both noted there is strong commercial pressure to approve the deals, and that the GOCR needs to be sure that a negative decision can be legally defended. Neither made a firm statement that the license would not be issued. The prime minister asked for U.S. help in marketing Aero Vodochody aircraft. End summary. ¶3. (S/NF) DCM raised reftel points with Deputy FM Pojar on May 10. Pojar said the MFA is actively engaged in the licensing question, and continues to take a "firm line." DCM stressed both the destabilizing impact Chavez's military build-up is having on the region and USG concerns about Venezuela's growing links with IRAN and the potential for transfer of technology. Pojar requested additional information, particularly on the latter point, that would be helpful in supporting a decision to deny the license. The MFA is examining EU regulations to determine if there is a legal basis for denial of the license. ¶4. (S/NF) In his meeting with Ambassador on May 17, PM Topolanek was well briefed on USG concerns and told the Ambassador up front that "my opinion is the same as yours" on the deal. He said that the Trade Ministry had already made a preliminary determination to issue the lease for the L-39 aircraft, manufactured by Czech firm Aero Vodochody. The noted that the issue was now waiting for the determination of the MFA. Topolanek thought the Foreign Minister was "leaning towards" denying the license. He noted that the problem for the GOCR is the absence of an official embargo on Czech or EU arms to Venezuela. Topolanek acknowledged the USG restrictions, but said that the Czech government needed to have a firm legal basis on which to deny a license application. ¶5. (S/NF) Ambassador noted our concerns with the proposed Aero Vodochody deal, not just the lease of planes, but the expectation that additional pilot training and potential for development of aircraft (L-159) without U.S. content. He stressed the impact the Chavez regime's aggressive military acquisitions were having on the region, and the growing evidence of links between Venezuela and Iran, including the transfer to IRAN of U.S.-origin aircraft. Topolanek made clear he understood our concerns and the broader context of a potential Czech military sale/lease to Venezuela. He added that these external linkages, separate from concerns about the Chavez regime alone, makes the situation "even more difficult," and that he saw many reasons why the proposed deal is "wrong." ¶6. (S/NF) Topolanek made clear that the government is under considerable commercial pressure to permit the sale. Therefore, he said, it was important to be able to "help" Aero Vodochody complete a sale somewhere other than Venezuela. He noted that the company has been talking about Bolivia about a potential L-159 sale, and wondered if the USG could help with this sale. ¶7. (S/NF) Comment and action request: The Czech government and Aero Vodochody have been trying to find a market for the L-159 for years. There is great pressure both in and out of government to license the potentially lucrative Venezuela deal. In the absence of an domestic or EU rules prohibiting such a deal, the MFA will need to have a solid case to support denial of the license. Embassy appreciates efforts already underway to provide us with material we can pass to the GOCR to support our concerns; the material should be as specific as possible. ¶8. (S/NF) The USG was actively involved in efforts to market the L-159 prior to Boeing's sale of its share in Aero Vodochody in 2004. Post recommends Washington consider offering the Czechs limited assistance in marketing the plane. Such an offer would likely have a significant impact on Topolanek. End summary and action request. GRABER