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DE RUEHSG #0703/01 2051911
ZNR UUUUU ZZH
P 241911Z JUL 09
FM AMEMBASSY SANTIAGO
TO RUEHC/SECSTATE WASHDC PRIORITY 5264
INFO RUEHAC/AMEMBASSY ASUNCION PRIORITY 4087
RUEHBU/AMEMBASSY BUENOS AIRES PRIORITY 1597
RUEHCV/AMEMBASSY CARACAS PRIORITY 2182
RUEHLP/AMEMBASSY LA PAZ JUL 6202
RUEHPE/AMEMBASSY LIMA PRIORITY 6299
RUEHMN/AMEMBASSY MONTEVIDEO PRIORITY 4497
RUEKJCS/SECDEF WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

UNCLAS SANTIAGO 000703 
 
SENSITIVE 
SIPDIS 
 
STATE FOR PM/RSAT - DANIELEWSKI, WHA/BSC - CROFT 
COMMERCE FOR MANN 
DOD FOR OSD - LENIHAN 
 
E.O. 12958: N/A 
TAGS: MASS PREL CI PE RS
SUBJECT: CHILE'S DECISION TO BUY RUSSIAN HELICOPTERS 
CREATES CONTROVERSY 
 
¶1.  (SBU) Summary:  Chile's decision to buy five Russian MI17 
helicopters generated controversy, especially after a letter 
from Commerce Secretary Locke to Chilean Ambassador to the 
U.S. Jose Goni was leaked.  Congressional members of the 
Defense Committee reacted strongly to the news, calling the 
decision "worrisome."  The controversy has led the press to 
publish further information on purchases of U.S. arms and 
equipment, sparking Peruvian "concern" regarding the 
purchases.  While the letter from Secretary Locke made news, 
the flap will likely subside, especially as the ongoing 
investigation into a scandal surrounding the early 1990's 
purchase of Mirage jets will continue to garner public 
attention.  End summary. 
 
¶2.  (U) Chile's purported decision to buy five Russian MI17 
helicopters began to generate controversy both internally and 
with its neighbors when a letter from Commerce Secretary 
Locke to Chilean Ambassador to the U.S. Jose Goni was leaked 
to the press on July 7.  While the letter expressed 
disappointment at the lack of an open bidding process, in the 
press it was characterized as a U.S. complaint that the 
Russian model was chosen over the U.S. made Black Hawk. 
Chile's reasons for deciding on Russian helicopters were 
characterized as two-fold -- cost savings and an attempt to 
improve its trade imbalance with Russia. 
 
¶3.  (U) Members of the Chamber of Deputies' Defense Committee 
reacted strongly to the news, making calls for full 
transparency and calling the decision "worrisome."  They 
cited an apparent contradiction between this purchase -- the 
first-ever of non-Western equipment -- and recent efforts to 
standardize purchases to save on maintenance costs.  The 
committee has called in top civilian and military officials 
to explain the decision. 
 
¶4.  (SBU) Embassy MILGP notes that the MI17 would need 
significant post-purchase investments in order to bring the 
equipment up to Western standards and allow Chile to use the 
helicopters outside of Chilean Air Space without special 
permission from its neighbors.  Despite Secretary Locke's 
letter's focus on the benefits of an open bidding process, 
the bidding issue has not been highlighted in the resulting 
controversy.  One mainstream blog even incorrectly purported 
that the Chilean decision to buy Russian came as the result 
of an open tendering process. 
 
¶5.  (U) The controversy has led the press to publish 
information about Chile's planned purchase of $275 million in 
U.S. arms and military equipment, a purchase already under 
review by the U.S. Congress.  In turn, the focus on Chile's 
arms purchases from the U.S. and Russia caused the Peruvian 
Minister of Defense to criticize Chile's "lack of 
transparency" and cite concerns that Chile is making 
"disproportionate" purchases that are going to concern 
Chile's neighbors due to an arms "imbalance."  A Peruvian 
congressman stated that "unfortunately, this pulls us into an 
arms race."  On July 21 Peru's Foreign Minister reiterated 
that Chile is "inciting an arms race" and suggested the issue 
be addressed by the UNASUR's Defense Council.  Chile's 
Foreign Minister called his own press conference the next day 
to respond, stating that "Chile's arms aquisitions are in 
accord with the country's modernization....just as we have a 
modern agricultural sector, we must provide our Armed Forces 
with the conditions they require to do their jobs." 
 
¶6.  (U) Meanwhile, the flap comes at an inopportune time -- 
there is an ongoing investigation into a scandal surrounding 
the purchase of French Mirage jets in the early 1990's that 
allegedly involved kickbacks for high level military and 
civilian personnel. 
 
¶7.  (SBU) Comment:  While the letter from Commerce Secretary 
Locke made news, the press has not highlighted the central 
issue regarding the lack of an open bidding process for 
medium lift helicopters.  The GOC recently hosted a seminar 
on government procurement to educate the public and private 
sectors about its commitments under the U.S.-Chile Free Trade 
Agreement.  It is unclear whether the proposed purchase of 
helicopters without an open tendering process is in keeping 
 
with Chile's government procurement commitments in the FTA. 
The flap has clearly raised some questions amongst key 
Chilean members of Congress, but will likely subside as the 
Mirage scandal continues to garner public attention.  Peru's 
reaction to Chile's arms purchases is expected and falls 
within the usual rhetoric on this issue.  End comment. 
SIMONS