SUSPECTED VIOLATION OF ARMS EXPORT CONTROL ACT BY

C O N F I D E N T I A L BANGKOK 000210 SIPDIS DEPARTMENT FOR PM/RSAT, EAP/MLS DEFENSE FOR DSCA/ISA-AP PACOM FOR J-4 E.O. 12958: DECL: 01/26/2020 TAGS: PREL PGOV MASS ETTC TH SUBJECT: SUSPECTED VIOLATION OF ARMS EXPORT CONTROL ACT BY THAI AIR FORCE Classified By: Deputy Chief of Mission James F. Entwistle, reasons 1.4 (b) and (d) ¶1. (C) Summary. Post believes that the Royal Thai Air Force (RTAF) has violated the Arms Export Control Act (AECA) by transferring Pratt & Whitney F100 engines to Samsung Industries in the Republic of Korea and Bet Shemesh Industries in Israel for overhaul and repair, prior to return to Thailand, without the required USG approval. While we are convinced that the transfer does not entail a substantial violation, as both countries already possess the same engine modules and gearboxes for their F-16s, the action by the RTAF nonetheless appears to violate the AECA and must be addressed. Post proposes demarche language for the Thai MFA to reinforce our concerns. The Embassy seeks guidance whether this course of action is acceptable to the Department and hopes to avoid jeopardizing possible future sales of U.S.-origin defense articles to treaty-ally Thailand. End Summary. APPARENT VIOLATION WHILE WAITING FOR REPAIR CONTRACT -------------- -------------- ¶2. (C) Thailand and other nations (Jordan, Egypt, and Taiwan) have waited over a year for renewal of the multi-country repair contract with Pratt and Whitney. RTAF has consistently expressed concern regarding this delay. The contract award date was originally slated for June 2009, and to our knowledge has still not been completed. During a recent office call, RTAF Chief of the Air Staff Air Chief Marshal Prajin Chantong expressed concern to the Joint U.S. Military Assistance Group Thailand (JUSMAGTHAI) and SAF-IA about delay and said it had significantly impacted RTAF's operational readiness rates. According to information supplied by RTAF, during June-October 2009 RTAF sent two F100 Engine Core Modules/High Pressure Turbines (Serial numbers: PWHO 11192 TIC and PWCO 10407 T/C) and one F100 Engine Gearbox (Serial number: PWGO 10464 T/C) to Samsung Industries in the Republic of Korea for overhaul and repair. During the same time period, RTAF also sent one F100 Engine Core Module/High Pressure Turbine (Serial number: PWCO 11186 T/C) and one F100 Gearbox (Serial number: PWGO 10426 - Level 4 Chips) to Bet Shemesh Industries in Israel for overhaul and repair. BACKGROUND -------------- 
 ¶3. (C) In March 2007, RTAF (through JUSMAGTHAI) submitted a Third Party Transfer Request to the Department of State to transfer F100 engine modules to Bet Shemesh Engines Ltd. for repair. However, Thailand failed to obtain the required end-use assurance letter from Bet Shemesh Industries and the Department of State returned the request to Thailand in July 2007 without action. It now appears that in 2009 Thailand commenced with F100 engine component and gearbox shipments to both Israel and the Republic of Korea for necessary repairs without proper State Department authorization. ¶4. (C) Bet Shemesh (BSEL) has been licensed to perform maintenance repair and overhaul (MRO) work on Pratt & Whitney F100 engines for the Israeli Air Force. BSEL also has a technical assistance agreement (TAA),but only to do repairs on Israeli F100 engines. Pratt & Whitney has export licenses in place to support BSEL in this effort. Post understands that if RTAF had received approval from the U.S. to transfer the engines to BSEL for MRO services, Pratt & Whitney's license would have allowed BSEL to provide service. Post does not know if Samsung has a TAA in place. ¶5. (C) RTAF is aware of Third Party Transfer request requirements as both JUSMAGTHAI and Pratt and Whitney have on several occasions explained the requirements. In addition, RTAF Letter of Acceptances for the engines require prior notification and prior written approval from the USG prior to sending the items to another country. DSCA also sent a representative to brief the RTAF on Third Party Transfer requirements in October 2004, after RTAF shipped F100 engines abroad for repair without prior approval from Department of State. ¶6. (C) JUSMAGTHAI officially notified RTAF of the possible third party transfer violation in December 2009, and requested RTAF provide the third party transfer approval. RTAF was unable to provide approval documentation. Post notes that this third party transfer violation did not pass new technology to either the Republic of Korea or Israel, as both countries already possess the same engine modules and gearboxes for their F-16s. As such, we do not believe this is a substantial violation of third party transfer requirements. NEXT STEPS -------------- ¶7. (C) The Embassy is convinced that there was no intent on the part of the RTG or RTAF to transfer technology to an unfriendly nation nor did RTAF transfer technology to a nation that did not already have the technology. Thailand is a close friend of the U.S. and a proven major non-NATO ally and partner. The Embassy requests that the Department bear these factors in mind when determining if a third party transfer violation has occurred and, if so, what additional steps need to be taken. ¶8. (C) In order to ensure that all relevant agencies within the RTG are fully aware of the seriousness of this matter the Embassy proposes a demarche to the MFA spelling out our concerns and seeking assurances that proper steps will be taken to avoid recurrences. Suggested text follows: - As you know, the Ministry of Foreign Affairs provides appropriate end-user, re-transfer and security assurances as required by the U.S. Arms Export Control Act. - It has come to our attention that a number of transfers involving aircraft engines and gearbox components were made to firms in Israel and the Republic of Korea in apparent violation of the assurances provided by the Royal Thai Government. - This is a serious matter which could jeopardize future arms transfers. - Officials from our Defense Security Cooperation Agency and the Department of State have briefed counterparts in the Royal Thai Air Force about proper procedures. Thai officials in those agencies have given us assurances that they will improve oversight and prevent a recurrence of this type of transfer. - The United States Government seeks a similar assurance from the Ministry of Foreign Affairs that more effective oversight will be shown to prevent an illegal third party transfer from occurring. ¶9. (C) The Embassy seeks guidance from the Department on whether the proposed demarche language is acceptable and what further steps, if any, we should take about this matter. JOHN