CZECH MFA PROVIDED WITH NEW INFORMATION ON

S E C R E T SECTION 01 OF 02 PRAGUE 000645 SIPDIS SIPDIS NOFORN EUR/NCE FOR GARBER AND KOSTELANCIK E.O. 12958: DECL: 06/05/2017 TAGS: PREL PGOV MASS MARR EZ VE SUBJECT: CZECH MFA PROVIDED WITH NEW INFORMATION ON VENEZUELA-IRAN RELATIONSHIP REF: A. JUNE 1 ZARZEKI-GREANEY E-MAIL ¶B. PRAGUE 569 Classified By: DCM Cameron Munter for reasons 1.4 (b) and (d) ¶1. (S) Summary: On June 4 the DCM provided the Czech MFA Political Director with newly releasable intelligence on Venezuela-Iran military cooperation. This information, combined with previously provided open-source material, may prove sufficient for the Czech Government to veto military technology cooperation and arms sales to Venezuela by Aero Vodochody, the Czech Republic's flagship aircraft manufacturer. However, we may not be able to prevent training of Venezuelan pilots from going ahead. End summary. ¶2. (S) DCM provided Ref A points (listed below) to MFA Political Director Martin Povejsil on June 4, as part of an effort to encourage the Czech Government to refuse to license proposed training of Venezuelan pilots by Czech firm Aero Vodochody (Ref B). Povejsil responded that his objections to transferring arms technology to Venezuela were very well known to the management of Aero Vodochody. Povejsil claimed Aero Vodochody had therefore deliberately selected pilot training for its initial cooperation with Venezuela because it would not incorporate any transfer of technology, preventing the MFA from having legal grounds to veto the deal. Povejsil felt the MFA would be unable to prevent the pilot training phase of the project from going forward, but maintained that Aero Vodochody's future plans to try to transfer aircraft and production technology to Venezuela would have to get MFA approval, which he would block. ¶3. (S) DCM thanked Povejsil for his work to date to prevent Czech arms companies cooperating with Venezuela, but observed that the United States would ultimately base its conclusions on the end result. The U.S. would not concentrate on procedural rules that prevented action by the MFA. Povejsil said he understood and would expect nothing less in the circumstances. DCM asked Povejsil to make the Prime Minister aware of this latest release of intelligence on cooperation between Iran and Venezuela. Povejsil readily agreed. ¶4. (S) Povejsil suggested two additional courses of action. He thought that pressure from Sikorsky, a major client of Aero Vodochody, could lead to the cancellation of Aero Vodochody's cooperation with Venezuela. He also suggested that the Ambassador speak with Industry and Trade Minister Riman, who to date has been an enthusiastic supporter of Aero Vodochody's dealings with Caracas. ¶5. (S) Comment: Post will continue to lobby the Czech Government in an effort to prevent any kind of cooperation between Aero Vodochody and the Venezuelan government. It appears that, absent commercial pressure on Aero Vodochody itself, pilot training on L-39s in Ukraine could be authorized. We intend to assure the Czechs that the United States remains committed to watching this issue closely. Increased Venezuelan military capabilities, even without technology or equipment transfers, would be a very problematic result. ¶6. (S) Comment continued: As mentioned in Ref B, Czech PM Mirek Topolanek thinks pressure for deals with Venezuela would be reduced if there could be increased sales of Aero Vodochody-produced L-159s to other countries. On June 4 Czech Deputy Minister of Defense Martin Bartak wrote to Ambassador Graber to ask "for the USG's tentative position on possible transfer" of L-159s (which contain U.S. content) to the Government of Bolivia (to be reported septel). This may become a factor in determining the total level of cooperation between Czech industry and Venezuela. End comment. ¶7. (S/NF) Begin points released to the Czech Republic: (S//REL CZECH) Caracas is increasingly looking to Iran for repairs of military equipment, defense plant construction, and basic arms and munitions. Chavez probably sees as encouraging Iran's experience with maintaining US military equipment under US sanctions and its apparent willingness to transfer to Venezuela production technology. Progress on military sales and cooperation has picked up since late 2006, PRAGUE 00000645 002 OF 002 and Iran is well-positioned to become a key military supplier to Venezuela. (S//REL CZECH) As some of the below examples demonstrate, one feature of the defense trade relationship between Iran and Venezuela is the willingness of both sides to retransfer foreign-origin military equipment without the necessary authorization from the original supplier. (S//REL CZECH) Iran and Venezuela were working to establish two ammunition production plants in Venenzuela as of October ¶2006. (S//REL CZECH) Iran has also reportedly agreed to establish a production line for the Iranian Fajr 3 light aircraft in Venezuela. (S//REL CZECH) We have information that Venezuela in January 2007 planned to purchase a variety of small arms and light weapons from Iran, including machine guns, mortars, and possibly RPG-7 rocket-propelled grenade launchers. These weapons were destined for Venezuela's reserve forces. If leaked to regional guerilla groups or terrorists, these weapons could be used to foment regional instability. (S//REL CZECH) We also have information that Venezuela was planning to sign a contract with Iran in May 2007 for the supply of unmanned aerial vehicles (UAVs) to Venezuela. The contract was possibly worth about $30 million. (S//REL CZECH) We have further information that Iran and Venezuela in 2006 established a comprehensive overhaul program for various US-origin aircraft and helicopters. (S//REL CZECH) Venezuela may have investigated the acquisition of Iranian Misagh manportable air defense systems (MANPADS),which are copies of Chinese QW-1 MANPADS; Noor and Nasr anti-ship cruise missiles; and Iranian-produced fast boats. GRABER