GERMANY TO FRANCE: STAY OUT OF OUR COMMERCIAL SATELLITE AFFAIRS

C O N F I D E N T I A L SECTION 01 OF 02 BERLIN 001080



SIPDIS

STATE FOR EUR/CE PETER SCHROEDER

STATE FOR ISN/MDSP DICK BUENNEKE



E.O. 12958: DECL: 09/03/2033

TAGS: ETTC, PGOV, PINR, MCAP, PREL, TSPA, IT, RS, CH, GM

SUBJECT: GERMANY TO FRANCE: STAY OUT OF OUR COMMERCIAL

SATELLITE AFFAIRS



REF: A. BERLIN 1049

B. BERLIN 765

C. BERLIN 601

D. BERLIN 561

E. BERLIN 181

F. 08 BERLIN 1575



Classified By: Global Affairs Unit Chief Don L. Brown for

reasons 1.4 (b) and (d).



1. (C) SUMMARY: The German Space Agency (DLR) is taking

steps to repel French interference in Germany's

electro-optical (EO) imagery satellite development by forming

strategic partnerships with satellite makers OHB-System AG

and the German portion of Astrium in Friedrichshafen. The

DLR is concerned that French influence in Astrium is steering

Astrium-Friedrichshafen in ways favoring the French

commercial space industry and not in DLR's best interest. As

an example, Astrium recently transferred management of its

subsidiary responsible for commercial satellite imagery

marketing/distribution, InfoTerra Ltd, away from

Astrium-Friedrichshafen to Astrium- SPOT Image S.A. in

Toulouse, France. To counter this trend, DLR plans to make

Astrium's industry rival, OHB-System, the prime on some

future contracts, thereby minimizing French influence (and

delighting OHB-System shareholders). According to an Astrium

employee, DLR's CEO recently sent a letter to the President

of EADS Astrium Transportation, informing him of DLR's

intentions to not/not include French-Astrium on a future

commercial satellite bid in Kazakhstan. END SUMMARY



2. (C) Astrium Friedrichshafen official and DLR consultant,

Tom Walati (please strictly protect) described Germany's

plans for a High Resolution Optical Satellite (HiROS) and

efforts to find US partners. (COMMENT: While Walati's

information is clearly intended to influence as well as

inform, we have seen no instances to date that his

information was not credible. END COMMENT) Walati described

French efforts to halt DLR's HiROS proposal as "fierce and

persistent due to its potential competition with French

industry." In addition to using OHB-System as a prime on

future contracts, Walati said DLR and Astrium Friedrichshafen

see a strategic partnership with US interests as the key

element to shield German satellite programs from French

influence.



DLR MESSAGE TO ASTRIUM: STAY OUT OF GERMAN SATELLITE AFFAIRS

-------------- --------------



3. (C) Walati said that on August 11, DLR CEO Dr.

Johann-Dietrich Woerner sent a letter to Evert Dudok,

President of EADS Astrium Space Transportation, informing

Astrium of DLR's intention to bid on a project in Kazakhstan

offering a HiROS system, a hyper-spectral imagery satellite

system, and training. According to Walati, DLR made it clear

in the letter that the German firm OHB System would be listed

as the prime contractor, with Astrium Friedrichshafen listed

as a subcontractor. In addition, the letter reportedly

conveyed DLR's assertion that there would be absolutely no

French involvement in this project proposal. (COMMENT: We

assess that the DLR letter has more to do with Germany

sending a message to France to quit meddling its their

satellite business than it does with the Germans competing

with France on a satellite package bid to Kazakhstan. END

COMMENT.)





FRANCE ALREADY MOVING GERMAN CHESS PIECES WITHIN ASTRIUM

-------------- --------------



4. (C) According to Walati, InfoTerra GmbH, a German

daughter company of Astrium Satellites which is responsible

for distributing Astrium geospatial products and services, is

a recent victim of French-induced "restructuring." He said

Astrium recently transferred management of InfoTerra away

from Astrium-Friedrichshafen to Astrium- SPOT Image S.A. in

Toulouse, France. As part of this reorganization, Astrium

demoted InfoTerra Managing Director, Joerg Herrmann and

replaced him with Mr. Vark Helfritz. Walati said the reason

Astrium gave for the reorganization was dissatisfaction with



BERLIN 00001080 002 OF 002





InfoTerra's progress.



5. (C) When InfoTerra was spun-off from Astrium Services to

be the official distributor of Astrium geospatial data,

Astrium reportedly gave Herrmann about three years to

generate enough revenue selling data to fund research and

development for future satellite systems. He indicated

Astrium management has been seeking ways to wrestle InfoTerra

away from Astrium-Friedrichshafen and that the

"dissatisfaction" with InfoTerra's progress is simply an

excuse for something they had already been planning.

(COMMENT: Herrmann told EconOff earlier this year his

company turned a modest profit in 2008 and expected this

trend to continue in 2009. END COMMENT)

Murphy