VZCZCXYZ0004
RR RUEHWEB

DE RUEHMD #0060 0211212
ZNR UUUUU ZZH
R 211212Z JAN 10
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC 1714
INFO RUEHHI/AMEMBASSY HANOI 0002

UNCLAS MADRID 000060 
 
SIPDIS 
 
PM/DTCC - FOR BLUE LANTERN COORDINATOR, MEREDITH SUNDLOF 
HANOI FOR MICHAEL ORONA 
 
E.O. 12958: N/A 
TAGS: ETTC KOMC SP VN
SUBJECT: REPLY TO BLUE LANTERN 050204437 
 
REF: A. STATE 130501 
     ¶B. MURRAY-SUNDLOF-ORONA E-MAILS 
     ¶C. GENERAL CORRESPONDENCE 2821-09 
 
¶1.  SUMMARY:  Post has made pre-license inquiries requested 
reftel regarding dealings between Vietnamese security forces 
and Spanish aerospace and defense leader European Aeronautic 
Defense and Space (EADS) CASA.  David de Teran, Head of 
Export Compliance for EADS CASA, informed Pol-Mil officer 
that EADS Casa is currently at different stages of 
negotiating two separate aircraft orders for two different 
branches of the Vietnamese security forces.  The fact that 
the sales are not yet finalized may explain the impossibility 
of independent verification of either sale so far.   The 
commodities included in license application number 050204437 
-- yoke balls and pins used to assemble electric motor pumps 
that are subsequently installed on C-295 aircraft -- are part 
of a an as-yet unsigned contract with the Vietnamese Marine 
Police, related to which the Department is already in 
possession of the end-use certificate for the pumps.  This 
deal is now moving forward and could be completed during 
2010, after delays due to Vietnamese priority on the 
chronologically newer, now more advanced contract.  In this 
latter transaction, EADS is pursuing the sale of five 
aircraft to the Vietnamese Air Force, as described in General 
Correspondence 2821-09 submitted to the Department (ref C). 
END SUMMARY. 
 
//General Correspondence 2821-09// 
 
¶2.  The more advanced of the two contracts is between EADS 
Casa and the Vietnamese Air Force (VAF) for five (5) C295 
aircraft.  This is the subject of General Correspondence 
2821-09 from November 2009 (ref C), which stated EADS Casa 
had initiated commercial contacts with the Vietnamese Air 
Force (VAF).  (NOTE:  the original GC referenced a total of 
six planes, but the number has since been reduced to five. 
End note.)  According to de Teran, EADS decided to send the 
General Correspondence based on the fact that the planes 
incorporate U.S.-origin ITAR-listed items and knowing that 
USG policy toward Vietnam is to approve such export licenses 
on a case-by-case basis.  EADS was contacted by the 
Department in December 2009 and subsequently is seeking to 
have the Government of Vietnam sign an end-user statement in 
relation to EADS Casa's request to DDTC to approve the 
retransfer of C-295s to the VAF.  De Teran said EADS does not 
expect to be able to provide the signed end-user statement it 
has already drafted and shared with the GOV until the end of 
February or beginning of March.  Nonetheless, he confirmed 
the bona fides of the potential sale of five C295s which do 
contain ITAR-controlled equipment to end-user Vietnamese Air 
Force for the stated end use of transport and passenger 
carriers. 
 
//Case Number 050204437// 
 
¶3.  The second contract -- this one with the Vietnam Marine 
Police (VMP) -- actually pre-dates the first and includes two 
(2) CN235s and one (1) C295 aircraft, key components for 
which EADS submitted end-user certificates as early as 
September 2009.  According to de Teran, discussions between 
the VMP and EADS Casa actually began in late 2008 but were 
"paralyzed" in 2009 when the GOV diverted its resources to 
the VAF deal described above.  Negotiations are moving again, 
and EADS expects the contract to be activated "at some point" 
during 2010.  In response to Pol-Mil officer's request for 
documentation to verify end-use and establish the bona fides 
of the proposed VMP sale, de Teran clarified that EADS Casa 
has not yet signed a contract with the VMP for C295 or 
similar aircraft, nor signed any contract with the GOV to 
supply aircraft whose intended end-user could be the VMP.  De 
Teran further indicated EADS Casa has yet to receive any 
equipment related to license application 050204437, its 
purchase orders frozen pending a firm commitment on the part 
of the Vietnam Marine Police. 
 
¶4.  EADS Casa nonetheless prefers to pursue subject license 
application, with the understanding that such a license would 
remain in effect for 48 months, and confident that a period 
of four years would be sufficient to finalize this contract. 
A responsible recipient of USML items, EADS assured Post that 
in the event the sale falls through or negotiations go beyond 
48 months, the company would advise its suppliers (including 
Eaton Aerospace Vickers Systems) and ensure that the 
Department is notified.  EADS CASA further understands 
Federal Register Notice Vol. 72, No. 63 prohibitions on the 
exports of components for lethal defense articles destined 
for Vietnam. 
SOLOMONT