UPDATE ON FMS CASE FOR MALTA; FUNDING REQUEST

UNCLAS VALLETTA 000107

SIPDIS

SIPDIS

DEPT FOR PM and EUR

E.O. 12958: N/A
TAGS: KCRM PREL PGOV MT
SUBJECT: UPDATE ON FMS CASE FOR MALTA; FUNDING REQUEST


1. (SBU) Summary: The Armed Forces of Malta has an urgent
requirement to acquire modern helicopters capable of safely
operating over water at long distances from its shores for
Counter-Terrorism, Counter-Narcotics, Border Control, and Maritime
Law Enforcement missions. In 2004, a Senate Delegation visiting
Malta promised to provide $6.5M for this program. An initial earmark
allocation in the FY05 INL budget of $2.976M was made with a promise
that the balance would be allocated in the FY06 budget - a promise
that Congress was unable to keep at that time. With the money
already allocated, the Maltese have initiated an FMS case for the
purchase of a new UH-72A from the U.S. Army. The cost for that
aircraft with the necessary support is estimated at $10.6M. Now that
ASPA is no longer in effect, Post believes it is in the U.S.
interest to make good on the original promise by providing the
$3.524M. If some or all of the funding should become available in
FY08 or FY09 FMF funds we would welcome that; we are also requesting
the funds in our FY10 budget. Provision of this U.S. grant would
leave the GoM with a balance of approximately $4.1M to fund from its
national budget - a much more manageable prospect for the small
country. End summary.


2. (SBU) In 2004, the Armed Forces of Malta (AFM) identified an
urgent requirement for modern helicopters capable of
Counter-Terrorism. Currently, they are flying three 1970's vintage
French-built aircraft that are heavily tasked, primarily in search
and rescue and Counter-Trafficking operations. These aircraft are
also used for civilian MEDEVAC and other typically civilian and
police related missions, as they are the only government helicopter
unit in the Maltese Islands. The current aircraft are restricted in
operational range and mission capability because they are single
engine, lack necessary equipment, and the airframes are very old.
These problems limit their overwater flight operations to daylight
hours only.


3. (SBU) Before the introduction of Armed Serviceman's Protection
Act (ASPA) in 2004, post's security assistance program was working
to replace this aging fleet using grant FMF funding. While
researching this project, a U.S. company dealing in second
hand-helicopters was contacted that said it was willing to provide
three used aircraft for $6.5 million. These helicopters, while not
brand new, would have been fully refurbished and capable of meeting
Maltese mission requirements.


4. (SBU) At the time that ASPA in was going into effect, Malta -- as
a new accession country to full European Union membership -- was
unable to conclude an Article 98 agreement with the U.S. This
resulted in the suspension of the Maltese FMF program.


5. (SBU) In the Summer of 2004, a Senate Congressional Delegation
visited Malta and was convinced by the then Ambassador and the
Maltese Chief of Defense of the need and merit of assisting the AFM
to buy more capable helicopters to secure their borders from a
variety of threats. A promise was made that the $6.5M would be
provided to make this possible. In response, an earmark for $3.0M
was placed in the FY05 Foreign Operations Budget with a promise of a
further $3.5M in the FY06 budget; however, due to changing
priorities, no further money for this project was allocated by
Congress in subsequent budgets. The FY05 money was given to the
State Department's International Narcotics and Law Enforcement (INL)
program to manage, and somewhere along the line turned into $2.976M
vice the legislated $3.0M. Prior to his departure from post in
December 2004, the then Ambassador publicly announced U.S. support
for the program in the local media.


6. (SBU) Once the Armed Forces of Malta began to assess its
operational needs and to determine the specific requirements for the
aircraft, they determined that the purchase of used aircraft with
limited lifespans would not serve their best interests, nor would it
be a wise use of the funding that the U.S. was donating for the
purchase. A review of all the currently available aircraft capable
of meeting the AFM's capabilities and requirements resulted in their
selection of the EC-145, known as the UH-72A in the U.S. military,
as the one best suited to their needs.


7. (SBU) At the same time, an Agreement was negotiated between U.S.
and the GoM on how the $2.976M was to be expended. It was agreed
that the money would be "transferred" to the GoM, to be expended on
a helicopter to meet the intent of Congress. The Agreement also
stipulates that the aircraft must be procured in the United States.
The Agreement was concluded on 30 November 2006.


8. (SBU) In accordance with the Agreement, and in line with their
own research, the AFM decided to purchase a UH-72A from the U.S.
Army via an FMS case. The case, MT-B-UBC, was initiated in April
2007 and an initial price for the aircraft came in at $10.6M for a
single aircraft with a full package of spares, technical support,
training and support equipment. It is expected that the price will
be the same or more when the final Letter of Offer and Acceptance is
provided to the AFM in the spring of 2008.


9. (SBU) With the inception of the FMS case, the $2.976M was
obligated and transferred from State/INL to the Maltese account at
the Defense Security Cooperation Agency (DSCA). The GoM committed
itself to funding the rest of aircraft on its own; however, it is
finding difficulty in actually doing so. In an effort to reduce the
overall cost and with the permission of the U.S. Army program office
for this program, the GoM approached the German Government,
(EADS-North America is the builder of the UH-72A) with a request for
help. The German Government by its own laws cannot support the
purchase with funding, but has asked EADS to provide the technical
support and training at very advantageous rates which it has agreed
to do. However, this has had no real impact on the overall cost of
the FMS case, and the GoM continues to find itself in difficulty
trying to fund the aircraft.


10. (SBU) With the lifting of ASPA sanctions in January 2008, Post
believes it to be in the U.S. interest to make good on its original
promise to provide $6.5M to the GoM for helicopter purchase.
Ideally some or all of the additional funding ($3.524M) could be
identified in the FY08 or FY09 FMF budgets for Malta should funding
become available. We are also requesting it in our FY10 budget.
This amount, combined with the $2.976M in INL funding already
obligated, will total the previously promised $6.5M and leave
approximately $4.1M for the GoM to fund - a much more manageable
prospect for the small country. (To put it in perspective, the
annual operations budget for the AFM totals just $13.5M, including
personnel expenses.)


11. (SBU) The provision of these aircraft to the AFM will have a
long-lasting impact on U.S.-Maltese relations. It will allow the
AFM to be more effective in applying the military-to-military
training that the U.S. has provided in the past. In particular, it
will allow them to provide better coverage within their assigned
search and rescue region. This will directly translate to the
ability to more effectively identify and interdict sea borne traffic
involved in Counter-Trafficking as well as Counter-Terror and
Counter-Proliferation operations and help Malta to address its
number one security issue - Illegal Migration.

DAVIS
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