1. (U) This is an action request. Embassy Mexico
City please see paragraph 7.



2. (S) Background: The Iran and Syria Nonproliferation
Act (ISNA) requires periodic reports to Congress
identifying foreign entities with respect to which there
is credible information indicating that they have
transferred to or acquired from Iran or Syria items on
multilateral lists (Australia Group (AG), Chemical
Weapons Convention (CWC), Missile Technology Control
Regime (MTCR), Nuclear Suppliers Group (NSG), and the
Wassenaar Arrangement (WA) or other items with the
potential to make a material contribution to missile,
WMD, or ballistic or cruise missile programs.



3. (S) The USG has determined that Aerospace Logistics
Services has engaged in activities, as noted above,
that warrant the imposition of measures pursuant to
Section 3 of the ISNA. (Note: Aerospace Logistics
Services was previously sanctioned under the ISNA in
December 2006 for a different transfer. (Ref A)
End Note)



4. (S//NF) Specifically, we have information
indicating information that the Mexican firm Aerospace
Logistics Services shipped Wassenaar-controlled J-85-21
engine components for F-5 fighter aircraft to Iran in
December 2004 and January 2005.



5. (S) Accordingly, pursuant to the provisions of the
ISNA, the following penalties are imposed on this
entity, its subunits, subsidiaries, and successors:

a. No department or agency of the United States
Government may procure, or enter into any contract for
the procurement of any goods, technology, or services
from them;

b. No department or agency of the United States
Government may provide any assistance to them, and they
shall not be eligible to participate in any assistance
program of the United States Government;

c. No USG sales to them of any item on the United States
Munitions List are permitted, and all sales to them of
any defense articles, defense services, or design and
construction services under the Arms Export Control Act
are terminated; and

d. No new individual licenses shall be granted for the
transfer to them of items, the export of which is
controlled under the Export Administration Act of 1979
or the Export Administration Regulations, and existing
such licenses are suspended.

These measures, which will take effect shortly, will
remain in place for two years and expire in April 2009.
(Note: These penalties extend for three and a half
months the penalties that were imposed in December 2006.
End Note.) We want to provide advance notice to the
Mexican Government of this decision, note that this
determination will be published soon in the Federal
Register, and make clear that the penalties are only on
the entity, and not on the government of Mexico.
End Background.



6. (S) Purpose/Objective: To inform the host
government of the sanctions determination prior to its
publication in the Federal Register.



7. (S) Action request: Post is requested to provide
the following suggested talking points to appropriate
Mexican government officials and report response.
Talking points also may be left as a non-paper. Post
should note that the second point is cleared language
from the intelligence community and must be used
verbatim.



8. (S//REL MEXICO) Suggested Talking Points:

-- The United States has determined that there is
credible information indicating that the Mexico-
registered company Aerospace Logistics Services
transferred to Iran items that are controlled on the
Wassenaar Arrangement Munitions List.

-- Specifically, the United States has information
that the Mexican firm Aerospace Logistics Services
shipped J-85-21 engine components for F-5 fighter
aircraft to Iran in December 2004 and January 2005.
The firm's address is KM 26.5 Toll Road, Tijuana-
Ensenada, Rosarito, Baja California, Mexico.

-- Based on this transfer, we have imposed certain
measures against this entity as provided in the
Iran and Syria Nonproliferation Act (ISNA).

-- The Iran and Syria Nonproliferation Act (ISNA)
requires a report to the U.S. Congress identifying
persons who have transferred goods, services or
technology controlled by multilateral nonproliferation
control regimes, such as the Wassenaar Arrangement, to
or from Iran or Syria or otherwise have the potential
to contribute materially to WMD, missile, or cruise
missile programs in Iran or Syria. Sanctions are
authorized against the persons (including entities,
individuals, governments and governmental entities)
involved in the transfers identified in such reports.

-- Accordingly, pursuant to the provisions of the ISNA,
the following measures are imposed on this entity, and
its successors, subunits, and subsidiaries:

a. No department or agency of the United States
Government may procure, or enter into any contract
for the procurement of any goods, technology, or
services from them;

b. No department or agency of the United States
Government may provide any assistance to them, and they
shall not be eligible to participate in any assistance
program of the United States Government;

c. No USG sales to them of any item on the United States
Munitions List are permitted, and all sales to them of
any defense articles, defense services, or design and
construction services under the Arms Export Control Act
are terminated: and

d. No new individual licenses shall be granted for the
transfer to them of items, the export of which is
controlled under the Export Administration Act of 1979 or
the Export Administration Regulations, and existing such
licenses are suspended.

-- These measures will take effect shortly and will
remain in place for two years.

-- This determination will be published soon in the
FederalRegister.

-- These sanctions do not target the Mexican government,
but only the entity involved in the transfer.

-- We urge you to investigate Aerospace Logistics
Services and to take necessary measures to prevent any
arms exports to Iran by Mexican firms. We would be
interested in your sharing with us any further information
on this or other commercial military transactions with
Iran, including the supply of equipment, transfer of
technology, or provision of maintenance or training, by
Aerospace Logistics Services or other entities. We also
welcome further discussion on this or other
nonproliferation cases that may come to your attention
and look forward to an enhanced dialogue on these
important nonproliferation questions.

(As appropriate/If the issue is raised by the Government
of Mexico)

-- Aerospace Logistics Services was sanctioned in
December 2006 for a separate transaction involving
similarly-controlled items. Under the ISNA we are
still required to report this separate transaction, for
which it was determined that sanctions were warranted.

-- Furthermore, UN Security Council resolution 1747
calls upon all states to exercise vigilance and restraint
in exporting to Iran any items on the UN Conventional
with Iran could diminish this message of international
resolve and, in light of an Iran's recent denunciation of
UNSCR 1747, make it seem that Mexico is willing to
cooperate with Iran on sensitive military hardware. It
is vital that we continue to speak clearly, with one
voice to Iran.

-- Consistent with UNSCRs 1737 and 1747, we urge your
government to investigate fully the activities of
Aerospace Logistic Services and ensure that this firm or
any other entity based in Mexico is not acting in
violation of the Security Council resolutions or
supporting Iran's WMD, missile, or advanced conventional
weapons programs of concern.

End suggested talking points.



7. (U) Please slug any reporting on this issue for
ISN/MTR and WHA/MEX. A response is requested as soon as
possible. Department point of contact is Matt Hardiman,
ISN/MTR, 202-647-3176(hardimanmx@state.sgov.gov).
RICE


NNNN




End Cable Text