DENIAL OF EXPORT LICENSE MAY HAVE NEGATIVE

UNCLAS NICOSIA 000567

SENSITIVE
SIPDIS

STATE FOR EUR/SCE, PM/DTCC. PM/RSAT

E.O. 12958: N/A
TAGS: KOMC ECON CY
SUBJECT: DENIAL OF EXPORT LICENSE MAY HAVE NEGATIVE
CONSEQUENCES

REF: 06/16/08 CAROUSO-GOODMAN E-MAIL


1. (SBU) On July 22, Post learned from Bell Helicopter
Corporation that PM/DDTC had denied the company an export
license for the sale of two helicopters to the Cypriot
Ministry of Justice (Police) for use largely for
search-and-rescue purposes. As Post stated in ref e-mail,
"We strongly support the sale to promote US interests that
include enhancing GOC search and rescue, CT capabilities, and
inter-agency coordination. We also strongly support the
appropriate provisos that include end-use by civilian
authorities only and exclusively. However, this should not
prevent joint interagency exercises between the police SWAT
team and military assets training for CT and search and
rescue scenarios, which the USG advocates." We understand
that the denial of this export license is based on "foreign
policy considerations" relating to looming Cyprus Problem
negotiations. However, our analysis indicates that this
action is contrary to our overriding foreign policy
consideration of encouraging a settlement between the two
sides of the Cyprus Problem.


2. (SBU) By denying this export license at a time when direct
negotiations are about to begin between the two parties to
the Cyprus Problem, the GOC will interpret this action as an
effort by the USG to pressure the GOC to yield to T/C or
Turkish demands or as the USG somehow acting in response to
Turkish pressure. Already, the Permanent Secretary of the
Ministry of Justice (responsible for managing the tendering
process for the procurement of two helicopters for the
police) has called Embassy econoff demanding to know why the
USG would deny a license at this point in time when in
previous years, two Bell helicopters for use by civilian
authorities had been approved.


3. (SBU) In addition to the foreign policy considerations, we
note that Cyprus was the point of evacuation for 15,000 US
citizens in 2006 and will likely play a similar role if/when
violence again erupts in that country. There is a strong
likelihood that numerous small vessels will be involved in a
future exodus from Lebanon. For several years we have
strongly advocated to the GOC that they improve their sea
search-and-rescue capabilities given the political volatility
to their east and the large Flight Information Region over
which they have responsibility in the eastern Mediterranean.


4. (SBU) We understand that PM/DDTC is currently considering
the request for approval of a maintenance contract with Bell
for helicopters purchased by Cyprus in 1997. We know that
this contract was approved in 2007 but, due to Cypriot
bureaucratic inertia, the GOC failed to proceed with the
contract prior to the export license's expiry. Again, if this
approval is not given now, with a new government apparently
committed to pursuing a settlement to the Cyprus Problem, it
may be taken as a signal of the USG trying to apply one-sided
pressure to the G/C negotiating process. This would harm not
only our topical interest in bolstering local civilian
operational capabilities, but would damage the negotiation
itself. Obviously, this would be counter-productive and
profoundly against our interest. Post strongly supports the
approval of the maintenance contract and a reconsideration of
the denial of the export license for the supply of two
additional aircraft.
SCHLICHER