VZCZCXYZ0020
RR RUEHWEB

DE RUEHVT #0107/01 0771355
ZNR UUUUU ZZH
R 171355Z MAR 08
FM AMEMBASSY VALLETTA
TO RUEHC/SECSTATE WASHDC 1440
RUEKJCS/SECDEF WASHINGTON DC
RHMFISS/HQ USEUCOM VAIHINGEN GE
RUEASAC/CDRUSASAC FT BELVOIR VA
RUEHVT/USDAO VALLETTA MT

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ASPA is no longer in effect, Post believes it is in the U.S. 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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