VZCZCXYZ0000
OO RUEHWEB

DE RUEHRO #1824 1711107
ZNR UUUUU ZZH
O 201107Z JUN 06
FM AMEMBASSY ROME
TO SECSTATE WASHDC IMMEDIATE 5148

UNCLAS ROME 001824 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ETTC ETRD IR IT
SUBJECT: FINMECCANICA SEEKS USG VIEWS ON PROPOSED 
INVESTMENT IN IRAN 
 
Sensitive but unclassified.  Not for Internet distribution. 
 
¶1.  (U) This is an action request.  Please see paragraph 6. 
 
¶2.  (SBU) Summary.  On June 15, A/Ecmin met with Simone 
Bemporad, Finmeccanica Senior Vice President for Media 
Relations and International Affairs, and Camillo Pirozzi, 
Head of Public Affairs in Finmeccanica's Institutional 
Relations Department.  Bemporad and Pirozzi requested the 
meeting to inform the USG of Finmeccanica's interest in 
bidding on a contract to provide communications equipment to 
two city police forces in Iran.  The Finmeccanica 
representatives said they requested the urgent meeting to 
preclude any misunderstanding with the USG -- given the 
sensitivities of dealing with Iran at this time -- and to 
ensure their business interests in the United States are not 
adversely affected by possible Finmeccanica investment in 
Iran.  The Finmeccanica representatives also gave a breakdown 
of current Finmeccanica activities in Iran.  End summary. 
 
Finmeccanica Interested in Contract for Police Radios 
--------------------------------------------- -------- 
 
¶3.  (SBU) Bemporad told A/Ecmin Finmeccanica subsidiary Selex 
Communications is interested in bidding on a contract to 
provide secure communications equipment to the city police 
forces of Isfahan and Mashhad, Iran.  The contract, worth 
approximately 6.5 million euros (about USD 8.2 million), is 
being tendered through the Iranian Ministry of the Interior. 
Bids on the contract must be received by June 19.  Bemporad 
noted that it is Finmeccanica policy seek USG approval before 
pursuing investments in Iran or other states of concern. 
 
¶4.  (SBU) Pirozzi said the contract Finmeccanica/Selex wants 
to bid on is for the provision of two terrestrial trunked 
radio (TETRA) systems for secure communications, and noted 
that Selex already provides similar technology to the 
Ministry of Interior in Tehran, oil companies, and civil 
authorities under contracts entered into prior to 
Finmeccanica's 2002 purchase of Selex.  (Note.  Prior to 
2002, Selex was owned by BAE and was named Marconi.  End 
note.)  To the best of Finmeccanica's knowledge, the 
equipment involved has no defense-related purpose and is 
intended solely for police communications.  In a subsequent 
e-mail, Pirozzi confirmed that Italian law does not require 
an export license for the export of TETRA radio systems and 
that "the TETRA system is not 'dual use' technology, nor 
included in the ammunition list.  Therefore, the export is 
not subject to any license or restriction."  During the 
meeting, Pirozzi noted other European companies are competing 
for this contract. 
 
¶5.  (SBU) Given the June 19 deadline, Bemporad said 
Finmeccanica is prepared to tender a bid on the contract, if 
the bid is non-binding and they can back out of a commitment, 
should the USG disapprove of the venture.  If the Iranian 
tender requires a binding commitment, Finmeccanica is willing 
to drop out of the competition.  Bemporad emphasized that 
Finmeccanica recognizes the tremendous value of its business 
relationship with the USG and does not want to jeopardize it 
through activities in Iran.  If the USG disapproves of 
Finmeccanica pursuing the TETRA radio contracts, Finmeccanica 
will not pursue it. 
 
¶6.  (SBU) Action requested:  Embassy Rome requests guidance 
for Finmeccanica regarding the provision of "secure" TETRA 
radio systems to city police forces in Isfahan and Mashhad 
Iran, through a contract being tendered by the Iranian 
Ministry of the Interior.  We request as speedy a reply as 
possible to provide Finmeccanica with a USG position in the 
spirit of cooperation with which they approached us on the 
matter.  End action requested. 
 
Current Finmeccanica Activities in Iran 
--------------------------------------- 
 
¶7.  (SBU) Bemporad and Pirozzi said Finmeccanica currently 
has two contracts in Iran.  The first is to provide 
conventional energy turbines to an unnamed Iranian power 
company.  This contract is worth approximately 300 million 
euros and is in its final stages.  In the second contract, 
Finmeccanica subsidiary Fata Engineering provides engineering 
services related to the operation of an aluminum plant.  This 
contract is also worth about 300 million euros.  Both 
Bemporad and Pirozzi emphasized that Finmeccanica and its 
subsidiaries are not engaged in any contracts related to 
Iranian military activities. 
SPOGLI