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Cablegate: Spain: Defmin and His Deputy On S-80 Subs Weapons

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 MADRID 002909

SIPDIS

SENSITIVE

SECDEF FOR OSD A.J. TORRES
JOINT STAFF FOR MAJOR STACY YIKE

E.O. 12958: N/A
TAGS: MASS MARR SP
SUBJECT: SPAIN: DEFMIN AND HIS DEPUTY ON S-80 SUBS WEAPONS
PACKAGE COMPETITION

1. (SBU) SUMMARY Ambassador Argyros phoned Spanish Defense
Minister Jose Bono July 16 to reinforce USG concern that the
bidding process for the Spanish S-80 submarine weapons
package, in which two U.S. companies are involved, remained
open and transparent. Ambassador noted to Bono that the
bidding deadline had closed during the previous Spanish
government, but that it now appeared that the process was
changing to allow French and German firms to compete. Bono
claimed the process remained open and transparent and
expressed his confidence in the U.S. companies involved, but
noted he had also received calls from the French and German
Foreign Ministers. Bono suggested DCM meet with Deputy
Defense Minister Pardo to further discuss the bidding
process; Charge met with Pardo July 27 and received a message
similar to Bono's to the Ambassador. Pardo said no final
decision would be made until at least the fall of 2004. END
SUMMARY

Ambassador's call to Defense Minister

2. (SBU) Ambassador phoned Defense Minister Bono Friday
July 16 regarding the S-80 warfare system for the Spanish
S-80 Submarine project. Ambassador urged Bono and the GOS to
strongly consider the American companies as potential vendors
(both Lockheed Martin and Raytheon are bidding for the
contract). The Ambassador noted that he understood that the
Minister was reviewing all contracts that were left without
being executed by the previous administration. The
Ambassador noted that it was understandable the new
government would wish to understand any contracts it would
have to sign. However, the Ambassador stressed he hoped the
review process would be open and transparent and that there
would be a level playing field. The Ambassador raised the
issue of allowing French or other companies to re-enter the
bidding process as a concern because as he understood it the
bidding process had already been closed and allowing new
entries did not seem to be in the spirit of an open and
transparent process.

3. (SBU) Bono responded that he understood the Ambassador's
concern about the U.S. companies and wanted the Ambassador to
know that he felt the two that were bidding were good
companies and that they were highly regarded by the GOS and
the Spanish Navy. Bono however added that he had had a
similar conversation with the French and German Foreign
Ministers. Bono told the Ambassador that while the GOS may
review the previous proposals submitted by the French neither
the French nor the Germans will have favorable treatment at
the review.

4. (SBU) Bono volunteered that he would instruct his Deputy
Defense Minister (MOD State Secretary) to call the Embassy
and provide the details of how the review process will be
conducted and when it will be decided. Bono re-emphasized
he understood why the Ambassador made the call.

Charge's discussion with Deputy Defense Minister

5. (SBU) As follow-up, Charge met with MOD State Secretary
Pardo July 26 to review the issue, as Bono had promised.
Pardo claimed the U.S. should be "absolutely unworried" by
the process. There is absolutely no anti-American bias in
the effort, nor is there a tendency to favor European
companies, Pardo claimed. The GOS would decide on the basis
of two criteria: which system the armed forces considered
the best technologically and which decision would best
advance Spain's defense industry and its cooperative efforts.
In all of this, Pardo repeated, there is "nothing hidden"
nothing "occult." Charge emphasized the benefits for
U.S.-Spain relations and for U.S.-Spanish defense ties if the
Spanish defense firm Izar was able to do business with a U.S.
firm on S-80 project. Pardo responded that defense
cooperation issues would be "fundamental" to the
decision-making process on this contract.

6. (SBU) Pardo noted that he himself had decided not to
meet with any of the companies involved (he had turned down a
meeting with Lockheed Martin reps last week), in order to
maintain the integrity of the process. He said that given
the highly-charged atmosphere with companies vying for a
lucrative contract, it was natural that "rumors" would arise
about the process. Charge noted the U.S. concern that the
technological specifications of the bid had changed in order
to allow French and German companies to participate. Pardo
said there was no formal change in the technological
specifications, but that the MOD had been or might be in
touch with some of the companies involved to clarify
questions or issues.

7. (SBU) Pardo stressed the importance to the MOD of
maintaining strong ties with the U.S., both on a personal and
political level. He said Spain wanted to maintain a
cooperative and friendly relationship with the U.S., and
noted the two companies involved in the S-80 contract were
well-regarded.

8. (SBU) Pardo told Charge that no decision would be made
until after Spain's traditional August summer break (e.g. at
the earliest in the fall).
MANZANARES

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