CZECHS REQUEST U.S. APPROVAL TO SELL L-159

C O N F I D E N T I A L SECTION 01 OF 02 PRAGUE 000646 SIPDIS SIPDIS E.O. 12958: DECL: 06/05/2017 TAGS: PREL PGOV MASS MARR EZ VE BL SUBJECT: CZECHS REQUEST U.S. APPROVAL TO SELL L-159 AIRCRAFT TO BOLIVIA REF: A. PRAGUE 569 ¶B. PRAGUE 645 Classified By: DCM Cameron Munter for reasons 1.4 (b) and (d) ¶1. (U) This is an action request. Please see paragraph 2. ¶2. (C) The Czech Deputy Minister of Defense has written to Ambassador Graber to formally request a U.S. opinion about the possible future transfer of ten Czech L-159 aircraft with U.S. content to Bolivia. Post sees no impediment to this transfer from the point of view of U.S.-Czech relations, and believes that this transfer may make it easier for friends within the Czech Government to continue to argue that there be no transfer of technology from Czech aircraft manufacturer Aero Vodochody to Venezuela (Refs A and B). Post defers to our colleagues in La Paz, WHA, and the rest of the USG to assess the advisability of such a transfer in the U.S.-Bolivian and regional context and requests the Department provide a written response to the Czech request. Text of the letter follows: ¶2. (C). (SBU) Begin text of letter: MINISTRY OF DEFENSE OF THE CZECH REPUBLIC FIRST DEPUTY MINISTER Martin BARTAK Prague, 1 June 2007 Your Excellency, Let me hereby inform you that we have recently seen an increased interest by several states, including Bolivia, in Aero L-159 aircraft, which the Armed Forces of the Czech Republic has in its inventory and uses them. However, as you are certainly aware, the Armed Forces has quite a number of surplus L-159 aircraft, for which there is no employment and are intended for sale in order to concentrate available defense resources for programs fostering the integration of Czech Republic's Armed Forces into Allied structures. In this respect, the Government of the Czech Republic passed a resolution some time ago charging the Ministry of Defense with the task to sell surplus aircraft. The sale of the aircraft would help the MoD Department substantially to cope with the latest defense cuts. Over several years, intensive efforts to sell the aircraft were hampered by the fact that the Aero Vodochody, manufacturer of the L-159 aircraft, struggled with numerous problems as a result of unsuccessful privatization. Unfortunately, those problems had a negative impact on the good reputation of Aero, which the current owner has difficulties to remedy, despite the aircraft themselves being competitive. You are certainly aware that the Boeing Corporation was one of the owners of the Aero Vodochody. Boeing's part in the aircraft development was undoubtedly highly positive in terms of technology, but, on the other hand, the integrated U.S. technology is now objectively a limiting factor for exports into some countries. Despite extraordinarily favorable conditions granted by the Czech Republic for Boeing as part of the privatization of Aero Vodochody, not a single aircraft was sold to any foreign country when Boeing owned the company. Although the Czech party acquired a large number of the aircraft (72 units),including in the interest of the manufacturer, this fact came to no use in the sense of marketing abroad. A massive investment in the Czech Republic's scale, contrasting with generally known insufficient employment of the acquired L-159 aircraft in the Armed Forces of the Czech Republic, the project has recently been subject to increased criticism both by experts and citizens in general. Selling the aircraft to Bolivia also could, although just partly, compensate for the investments the Czech Republic made during development and fielding of the aircraft. As far as Bolivia, a country seriously interested, is PRAGUE 00000646 002 OF 002 concerned, the Czech Republic is unaware of any embargo imposed by international community on trading in defense equipment with Bolivia. Nevertheless, given the fact L-159 design uses U.S.-made components, I am taking the liberty of informing you of our preliminary discussions with Bolivia, and, at the same time, let me kindly ask you for the USG's tentative position on possible transfer of the L-159 capability to the Government of Bolivia. In spite of all serious reservations to the present Bolivian administration, which we fully share with the U.S., we do not believe, considering the aircraft performance, that a sale of L-159 aircraft would have any effect on the current balance of powers in the region. By the way of conclusion, let me inform you that, in case of Bolivia, it would not be a simple sale, but a barter trade, with the Czech acquiring two new transportation aircraft manufactured by EADS in exchange for approximately 10 units of L-159. Needless to say that airlift capability is urgently needed for transportation of our forces for allied deployed operations. We expect that, upon preliminary approval, a private business commissioned by the Czech Ministry of Defense will follow standard procedures in contacting the relevant U.S. subcontractor on the matter of export license, or we are possibly ready to accept any other legitimate procedural requirements by the U.S. Yours Sincerely Martin Bartak End text of letter. GRABER