BOSNIA: GEORGIAN ARMS DEAL REVIVED?

S E C R E T SARAJEVO 001738

SIPDIS

SIPDIS

SECDEF FOR FATA AND BEIN, DEPT FOR EUR (DICARLO),D
(SMITH),P, EUR/SCE (HOH, FOOKS, FAGAN),PM AND EUR/RPM
(BROTZEN),NSC FOR BRAUN

E.O. 12958: DECL: 08/09/2017
TAGS: PGOV PREL PARM MASS MARR BK GG RS SR
SUBJECT: BOSNIA: GEORGIAN ARMS DEAL REVIVED?


Classified By: DCM Judith Cefkin for reasons 1.4 (b) and (d)

Summary
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1. (S) In recent weeks, several high-ranking government
officials have raised the possibility of reviving a
Bosnia-Georgia arms deal that was scuttled in 2006 over
strenuous Russian objections. President Komsic and his
senior advisors seem to be the main proponents of reviving
the sale, which involves the shipment of Multiple Launch
Rocket System (MLRS) components and ammunition from Bosnia to
Georgia. A senior MFA official also told the DCM that he
suspects corruption within related ministries is contributing
to renewed interest in the sale, and, as a result, export
controls on defense articles are being circumvented. Post
has reiterated that the USG takes no position on the sale
provided that it is consistent with Bosnian law and export
controls nd international arms control agreements. End
Smmary.

ROCKETS TO GEORGIA
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2. (S) The original transfer agreement includedthe purchase
of several new MLRS command and logstic vehicles, the
refurbishment of several vehiles already in Georgian
stockpiles, and the purchase of ammunition. The proposal was
blocked on foreign policy grounds by the Ministry of Foreign
Affairs in late 2006 after Russia protested the sale. In
June of this year, the Georgian government and the Melvale
Corporation, a Seychelles registered brokering company,
resubmitted an export license application and end-user
certificate to the Bosnian Ministry of Foreign Trade. The
request has been forwarded to the Ministries of Foreign
Affairs, Defense, and Security for comment.

HIGH-LEVEL FOCUS
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3. (S) In recent weeks, President Komsic has inquired about
the USG position on the sale. Komsic's chief of staff, Amir
Ibrovic, has repeatedly raised the proposal and asked our
position. Ibrovic has urged the U.S. not to oppose the
transfer asserting that the $20 million deal would allow the
Bosnian production firm (Novi Travnik) to invest in military
research and development and that if the deal is blocked
Georgia will purchase the same items from competitors in
Serbia.


4. (S) Assistant Minister for Trade Dragisa Mekic,
responsible for export licenses for defense items, told us
that he was "surprised" that the sale had re-surfaced, as he
had thought that MFA's decision to block its realization last
year would have been final. Mekic confirmed that the
Ministry of Foreign Trade had been heavily lobbied by the
office of one member of the Presidency to move the process
forward as quickly as possible. (Comment. Mekic is almost
certainly referring to Komsic's staff. End Comment.) Mekic
also provided us with all copies of the export license
application, the Georgian end-user certificate, and the
registration documents for the Melvale Corporation.
Separately, Assistant Foreign Minister Nedzad Hadzimusic
requested a meeting with the DCM, at the Embassy, to discuss
the pending sale. Hadzimusic claimed that "corrupt
interests" within the Ministry of Foreign Affairs,
particularly the Ministry Secretary (the number three
official),stood to gain from the transfer and were working
to get the sale approved. Hadzimusic asserted that that the
Georgia matter was just one part of the activities of these
corrupt officials, and the deal had the potential to create
a huge scandal for Foreign Minister Alkalaj and possibly the
Ministries of Defense and Foreign Affairs.

COMMENT
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5. (S) The resurrection of this deal is surprising. Although
we have no way to evaluate Hadzimusic's assertions about
corruption driving the sale, it is not implausible that its
revival may be due to personal, rather than policy interests
on the part of Bosnian officials. As usual, the competing
interests are each are looking to the United States to lend
legitimacy to their individual positions on the sale. It
remains unclear why Komsic is so focused on this deal
considering it is unlikely that his Bosnian-Serb Presidency
counterpart Nebojsa Radmanovic would seek to block the sale.
When queried on the sale, we have consistently maintained
that the USG takes no position, in support of, or opposition
to the sale provided it is consistent with Bosnian law
international arms control agreements. End Comment.
MCELHANEY