US embassy cable - 02ROME186

C O N F I D E N T I A L SECTION 01 OF 02 ROME 000186 
 
SIPDIS 
 
E.O. 12958: DECL: 12/27/2011 
TAGS: ETTC, PREL, ETRD, TSPA, PARM, CH, PREL, ETRD, TSPA, PARM, CH, IT, MTCRE, ITETTC, MTCRE, EXPORT CONTROLS 
SUBJECT: DELIVERY OF ATLANTIC BIRD DEMARCHE TO GOI AND 
ALENIA 
 
REF: SECSTATE 213498 
 
CLASSIFIED BY: ESTCOUNS DAVID MULENEX FOR REASONS 1.5 B AND D. 
 

1. (C)  SUMMARY:  EMBASSY     DELIVERED REFTEL DEMARCHE TO 
THE GOI AND ALENIA SPAZIO ON DECEMBER 18 AND 21, 
RESPECTIVELY.  BOTH CLEARLY UNDERSTOOD REFTEL MESSAGE THAT A 
PRESIDENTIAL WAIVER OF THE EXPORT CONTROLS REGARDING ATLANTIC 
BIRD WOULD BE HIGHLY UNLIKELY IN THE CONTEXT OF CURRENT 
CHINESE UNRESPONSIVENESS TO U.S. NON-PROLIFERATION CONCERNS. 
ALENIA REPRESENTATIVES EXPRESSED FRUSTRATION WITH THE 
SITUATION, BUT THEY ALSO POSED A HYPOTHETICAL SOLUTION THE 
ISSUE BY REMOVING THE U.S. ORIGIN COMPONENTS FROM ATLANTIC 
BIRD.  AN ALENIA OFFICIAL ADMITTED THAT HIS COMPANY WISHED TO 
PURSUE ADDITIONAL CHINESE CONTRACTS BUT WAS CONCERNED ABOUT 
POTENTIAL U.S. POLITICAL INTERFERENCE.  ALENIA EXPRESSED THE 
DESIRE FOR A BILATERAL ITALO-AMERICAN AGREEMENT LAYING OUT 
CLEAR RULES ON COOPERATION WITH CHINA.  ITALIAN AMBASSADOR TO 
THE U.S. SALLEO WILL BE TAKING THIS ISSUE UP WITH THE 
DEPARTMENT IN THE NEAR FUTURE.  END SUMMARY. 
 
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MINISTRY OF FOREIGN AFFAIRS REACTION 
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2.  (C)  ON DECEMBER 18, 2001, ESTCOUNS DELIVERED REFTEL 
DEMARCHE TO UGO DE MOHR, HEAD OF THE ITALIAN FOREIGN 
MINISTRY'S DUAL-USE EXPORT CONTROL OFFICE.  DE MOHR INDICATED 
THAT HE UNDERSTOOD THE ULTIMATE POINT OF THE DEMARCHE 
REGARDING U.S. REASONS FOR NOT PURSUING A PRESIDENTIAL WAIVER 
TO THE TIANANMEN SANCTIONS AND ACCEPTED THE DEMARCHE LARGELY 
WITHOUT COMMENT.  HIS ONLY QUESTION WAS WHETHER THE EVENTS OF 
SEPTEMBER 11, 2001 HAD CHANGED U.S. ATTITUDES TOWARD CHINA. 
ESTCOUNS POINTED OUT THAT THE DEMARCHE INDICATED THAT 
SEPTEMBER 11 HAD NOT CHANGED U.S. CONCERNS REGARDING CHINA'S 
UNHELPFUL ATTITUDE TOWARD STEMMING THE PROLIFERATION OF 
MISSILE RELATED TECHNOLOGY. 
 
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ALENIA SPAZIO 
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3.  (C) DE MOHR ALSO ASKED WHETHER THE UPCOMING BILATERAL 
"GLOBALIZATION" TALKS CONCERNING DEFENSE TRADE MIGHT INCLUDE 
DISCUSSION OF DUAL-USE EXPORTS AND THIRD PARTY TRANSFERS.  HE 
REFERED TO EMBASSY DISCUSSIONS IN SUMMER 2001, IN WHICH HE 
SUGGESTED THAT THE U.S. AND ITALY SHOULD SEEK SOME COMMON 
GUIDELINES CONCERNING TRADE IN POTENTIALLY SENSITIVE ITEMS TO 
CHINA.  THE GOI GOAL IS TO STAY ABREAST WITH THE U.S. IN 
EXPLORING TRADE OPPORTUNITIES WITH CHINA, WHILE REMAINING 
SENSITIVE AND RESPONSIVE TO USG CONCERNS ABOUT TECHNOLOGY 
TRANSFER.  ESTCOUNS PROMISD TO SEEK CLARIFICATION FROM THE 
DEPARTMENT AND DOD CONCERNING THE SCOPE OF THE TALKS. 
 
4.  (SBU) LENIA SPAZIO CEO GIUSEPPE VIRIGLIO AND ALENIA 
MAKETING VP PIANTELLA, RECEIVED REFTEL DEMARCHE FROMEST 
OFFICERS ON DECEMBER 21.  ESTCOUNS STRESSED HE 
CONFIDENTIALITY OF THE DEMARCHE, PARTICULARLY REGARDING OUR 
 
SIPDIS 
POLICY TOWARD CHINA AND NOTED THAT IT WAS HIGHLY UNUSUAL FOR 
THE UNITED STATES TO MAKE SUCH A DOCUMENT RELEASABLE TO A 
PRIVATE COMPANY.  VIRIGLIO RESPONDED WITH AN EXPRESSION OF 
APPRECIATION FOR THE DEMARCHE AND REITERATION OF ALENIA'S 
POSITION THAT THE LAUNCH INTO ORBIT OF ATLANTIC BIRD FROM 
CHINESE SOILDOES NOT CONSTITUTE AN EXPORT TO CHINA. 
 
5.  (SBU) VIRIGLIO ASKED THAT IF ALENIA WERE PREPARED TO 
REMOVE THE U.S. ORIGIN COMPONENTS FROM ATLANTIC BIRD AND 
REPLACE THEM WITH EUROPEAN COMPONENTS, IF TIS WOULD OBVIATE 
U.S. OBJECTIONS.  HE ASKED WHETER THE U.S. GOVERNMENT WOULD 
STILL ATTEMPT TO OBSTRUCT THE LAUNCH OF ATLANTIC BIRD ONBOARD 
A CHINEE LONG MARCH SPACE LAUNCH VEHICLE (SLV), EVEN THOUH 
THERE WOULD NOT BE ANY U.S. COMPONENTS ABOARD. VIRIGLIO 
EXPANDED ON THIS QUESTION BY ASKING WHTHER THE UNITED STATES 
WOULD BE OPPOSED TO ALENIA COMPETING FOR CHINESE AEROSPACE 
CONTRACTS.  HE EXPLAINED THAT IF ALENIA RENEGED ON THE USE OF 
THE LONG MARCH SLV FOR ATLANTIC BIRD, ALENIA WOULD NOT BE 
ABLE TO COMPETE FOR A NUMBER OF FUTURE CHINESE 
TELECOMMUNICATIONS SATELLITE CONTRACTS.  HE MENTIONED THE 
DONGFENG IV AS AN EXAMPLE BUT DID NOT ELABORATE FURTHER.  IN 
EFFECT, VIRIGLIO INTIMATED THAT CHINA WOULD TREAT THE 
ATLANTIC BIRD LAUNCH AS A LITMUS TEST IN DETERMINING ALENIA'S 
RELIABILITY AS A SUITABLE PARTNER FOR FUTURE CHINESE SPACE 
PROJECTS. 
 
6.  (SBU) VIRIGLIO REITERATED ALENIA'S INTENTION TO COMPLY 
STRINGENTLY WITH RELEVANT U.S. LEGISLATION REGARDING EXPORT 
CONTROLS.  IN THE CASE OF CHINA, A POTENTIALLY LUCRATIVE 
MARKET FOR ALENIA, VIRIGLIO INDICATED HIS DESIRE FOR A 
BILATERAL GOVERNMENT TO GOVERNMENT AGREEMENT THAT WOULD SET 
OUT CLEAR RULES FOR FUTURE COOPERATION WITH CHINA.  HE 
COMPLAINED THAT THE UNCERTAINTY OF A CASE-BY-CASE APPROACH 
WAS MAKING IT EXTREMELY DIFFICULT FOR ALENIA TO ESTABLISH A 
COORDINATED BUSINESS PLAN TOWARD THE CHINESE MARKET.  HE 
INDICATED THAT THE ITALIAN AMBASSADOR TO THE UNITED STATES, 
 
R 140619Z JAN 02 
FM AMEMBASSY ROME 
TO SECSTATE WASHDC 1639 
INFO AMEMBASSY BEIJING 
 
C O N F I D E N T I A L SECTION 02 OF 02 ROME 000186 
 
SIPDIS 
 
E.O. 12958: DECL: 12/27/2011 
TAGS: ETTC, PREL, ETRD, TSPA, MTCRE, PARM, CH, IT 
SUBJECT: DELIVERY OF ATLANTIC BIRD DEMARCHE TO GOI AND 
ALENIA 
 
AMB. SALLEO, WOULD APPROACH THE DEPARTMENT TO FACILITATE A 
SERIES OF MEETINGS BETWEEN ALENIA EXECUTIVES AND RELEVANT 
U.S. OFFICIALS TO LAY THE GROUNDWORK FOR SUCH AN AGREEMENT. 
 
7.  (C) EMBASSY COMMENT.  WE HEARD LOUD AND CLEAR FOR THE 
FIRST TIME FROM ALENIA OFFICIALS THAT THE PRIMARY 
SIGNIFICANCE OF ATLANTIC BIRD FOR THE COMPANY IS NOT THE SUNK 
COSTS FOR THE CHINESE LONG MARCH SLV, BUT THE DOWNSTREAM 
ORDER BOOK THAT MAY BE AT STAKE AND WORTH HUNDREDS OF 
MILLIONS OF DOLLARS.  WHILE WE HAVE NO REASON TO BELIEVE THAT 
MFA WILL BACK OFF ITS REPORT FOR OUR DECISION, WE MAY HEAR 
FROM AMB. SALLEO AND MFA SOME GROUSING AND PROPOSALS TO AVOID 
INSTANCES SIMILAR TO ATLANTIC BIRD IN THE FUTURE.  END 
COMMENT. 
POPE 
 

 2002ROME00186 - Classification: CONFIDENTIAL