VZCZCXRO0206
OO RUEHAG RUEHROV RUEHSL RUEHSR
DE RUEHMZ #0241/01 2640747
ZNY CCCCC ZZH
O 210747Z SEP 09
FM AMCONSUL MUNICH
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4917
INFO RUCNMEU/EU INTEREST COLLECTIVE IMMEDIATE
RUCNMEM/EU MEMBER STATES COLLECTIVE IMMEDIATE
RUCNFRG/FRG COLLECTIVE IMMEDIATE
RUEAIIA/CIA WASHINGTON DC IMMEDIATE
RUEHVEN/USMISSION USOSCE IMMEDIATE 0040
RHMFISS/CDR USEUCOM VAIHINGEN GE IMMEDIATE
RUEHNO/USMISSION USNATO IMMEDIATE 0312
RUEKDIA/DIA WASHINGTON DC IMMEDIATE
RUEKJCS/SECDEF WASHDC IMMEDIATE
RUEHGV/USMISSION GENEVA IMMEDIATE 0033
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC IMMEDIATE

C O N F I D E N T I A L SECTION 01 OF 02 MUNICH 000241 
 
SIPDIS 
 
OSD POLICY FOR RICHARD DOTSON, CIA FOR MARY SANFORD 
 
E.O. 12958: DECL: 09/21/2019 
TAGS: ETTC PGOV PINR MCAP PREL FR IT UK GM
SUBJECT: BAVARIAN CALL TO ARMS - CSU DEFENDS GERMAN DEFENSE 
INDUSTRY 
 
Classified By: Consul General Conrad Tribble for reasons 1.4 (b) and (d 
) 
 
------- 
SUMMARY 
------- 
 
¶1. (C)  The consolidation of the global defense industry will 
affect Germany and Bavaria significantly, the Christian 
Social Union (CSU), Germany's leading regional political 
party, warned its members at a party congress on September 4 
in Munich.  Speakers mocked Germany's overly modest and 
hide-bound support of its defense industry when it should 
compete self-assured and bare-knuckled.  To maintain, much 
less increase, market share, Christian Schmidt (CSU), State 
Secretary for Defense, and other leading CSU experts demanded 
stronger and more coordinated efforts by the Chancellor to 
promote the sale of German and Bavarian armaments and systems 
worldwide.  To remain competitive with France and the United 
States especially, speakers said the German defense industry 
must move beyond its obsession with producing only the best 
and identify which products buyers really need and get them 
from design to production more quickly.  End Summary. 
 
2 (C)  The Christian Social Union convened its first 
"Military Technical ("Wehrtechnischen") Congress" in Munich 
on September 4 to discuss the prospects for growth and 
prosperity of the defense-related industry in Bavaria and 
Germany.  400 firms representing one-third of the 6.5 billion 
euro German defense industry are situated in Bavaria or have 
large subsidiaries here, including major players EADS, 
Eurocopter, Kraus Maffai Wegmann (KMW), Rohde & Schwarz and 
Diehl, and medium-sized companies like ESG or LFG. Presenters 
included Peter Ramsauer (leader of the CSU caucus in the 
Bundestag), Christian Schmidt (State Secretary in the Defence 
Ministry), Georg Fahrenschon (Bavarian finance minister), 
Werner Dornisch (president of the German society for defence 
technology), and Martin Hauenschild (Director of bavAIRia, a 
Bavarian marketing association focusing on the aerospace and 
space cluster).  Hans Raidel, member of the Bundestag (MdB), 
was chair.  Among the 100 participants were also local CSU 
politicians, active and retired military officers, and 
representatives of Bavarian defense industries.  The Congress 
was closed to the general public but Consulate General Munich 
Political Chief attended on the invitation of the CSU 
secretariat; the speakers were not aware that an American was 
in the audience and the discussion was quite open and lively. 
 
WAR IS THE FATHER OF INNOVATION 
-------------------------------- 
 
¶3.  (C)  State Secretary Schmidt acknowledged that the 
defense industry was a critical component of Germany's 
industrial and technological base, a major economic sector, 
and an important inspiration for German industrial innovation 
overall.  To protect Germany's market share, he urged 
manufacturers to become more flexible and responsive to the 
needs of customers.  The industry was "still operating based 
on defense decisions made years ago, which were now 
irrelevant," he charged, and he basically accused them of 
elitism, since they offered "pricey, gold-plated products 
("Goldrandloesungen")" that met the very highest standards 
but were often too expensive or not really what the broad 
market needed.  The Eurocopter UH Tiger was an example, he 
said, as it was designed to destroy tanks but in spite of the 
more versatile French version deployed to Afghanistan in 
July, the helicopter would have problems doing its job 
fighting insurgents there.  Schmidt insisted that the German 
policy in the defense industry sector must become better 
coordinated and he said the next governing coalition should 
set up a special coordinating office in the Chancellor's 
office. 
 
GET OVER HISTORY - GERMANS SHOULD SUPPORT DEFENSE SECTOR 
--------------------------------------------- ----------- 
 
¶4.  (C)  Despite the importance of the defense sector, 
Germans failed to appreciate its importance, several speakers 
charged, and they bemoaned the fact that the German public 
 
MUNICH 00000241  002 OF 002 
 
 
still failed to support the export of military equipment, for 
visceral historical reasons that were out of step with modern 
Germany.  High-ranking German politicians normally do not 
lobby openly for German defense technology on trips abroad, 
Werner Dornisch pointed out.  In contrast, competitors like 
France and America supported their defense sectors on a grand 
scale at the official level.  Lobbying for French products by 
President Sarkozy was the prime example, seen recently in the 
United Arab Emirates and in India.  Schmidt urgued German 
businesses to invest more outside Germany in order to gain 
the upper hand in deals as the industry consolidated. 
 
POLICITAL COMPETENCE SHOULD MATCH TECHNICAL COMPETENCE 
--------------------------------------------- --------- 
 
¶5.  (C)  Schmidt said that political support of the defense 
sector from the German federal government was anemic and 
uncoordinated.  Several Bavarian-based speakers added that 
there was also no effective cooperation between the federal 
and state governments.  Lacking good political coordination, 
the German defense industry suffered further because it was 
privately organized at the industry level, Dornisch said. 
Speakers charged Chancellor Merkel with doing German defense 
industry a disfavor by not engaging more openly on major 
international arms deals, such as the contest for India's 
medium multirole combat aircraft (MMRCA).  Fahrenschon, 
Dornisch and Hauenschild noted that in the big European 
cooperation programs, such as in the aeronautic and space 
sectors, the Bavarian industries cried out for more political 
support.  Asking "what comes after Eurofighter," speakers 
urged Germany to fight for a leadership position by 
capitalizing on its reputation for competent production. 
They warned that failing to do this, Germany could one day 
find that advanced production was taking place in France, 
Italy and UK, and German sites could end up with the 
manufacture of minor and less complicated components. 
 
------- 
COMMENT 
------- 
 
¶6. (C)  The CSU appears determined at the federal and state 
level to move beyond German history and bureaucracy to 
embrace strong marketing and political tactics to promote 
German defense products as well as German leadership in a 
very competitive global environment.  Earlier this year, the 
deployment of Bundeswehr Eurofighter jets to India, to take 
part in a demonstration during in the Indian fighter jet 
tender, met with much criticism in Germany.  CSU speakers 
openly admired French savoir faire in getting more than their 
share of cooperation projects in European defense, where hard 
national interests count first.  The next Chancellor will 
find concerted pressure from the junior partner CSU to model 
Nicolas Sarkozy and do more at the level of the Chancellery 
to support the defense industry, not least to keep Bavaria on 
top as one of the major hubs of the defense industry in 
Europe. 
TRIBBLE