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Cablegate: F-16 Loa Signed at Last.

VZCZCXRO6356
PP RUEHLH RUEHPW
DE RUEHIL #9208/01 2751031
ZNY CCCCC ZZH
P 021031Z OCT 06
FM AMEMBASSY ISLAMABAD
TO RUEHC/SECSTATE WASHDC PRIORITY 1582
INFO RUEHNE/AMEMBASSY NEW DELHI PRIORITY 9402
RUEHKP/AMCONSUL KARACHI PRIORITY 2947
RUEHLH/AMCONSUL LAHORE PRIORITY 0249
RUEHPW/AMCONSUL PESHAWAR PRIORITY 8304
RUEKJCS/SECDEF WASHINGTON DC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY

C O N F I D E N T I A L SECTION 01 OF 02 ISLAMABAD 019208

SIPDIS

NOFORN
SIPDIS

E.O. 12958: DECL: 09/05/2016
TAGS: MASS MCAP PK PREL
SUBJECT: F-16 LOA SIGNED AT LAST.

REF: A.) ISLAMABAD 017768 B.) ISLAMABAD 017992

Classified By: Ambassador Ryan C. Crocker, Reasons 1.4 (b) and (d)

1. (C) MG Tariq Salim Malik, Additional Secretary of
Ministry of Defense Production (MODP), signed the Letter of
Acceptance (LOA) to purchase 18 F-16s Saturday evening,
September 30. Following the private signing ceremony, MODP
presented to Office of Defense Representative Pakistan a side
memo, the text of which is printed in paragraph 3.

2. (C) Comment: We consider the memo to be separate from
the LOA, which constitutes a valid legal contract. Many of
the issues raised in the memo were addressed and resolved in
President Musharraf's Washington D.C. meetings with President
Bush, Secretary Rumsfeld, and other USG principals. In
preparing a response, post encourages USG agencies to include
references to the understandings regarding the F-16 LOA that
came out of those Washington meetings. End Comment.

3. (SBU) Text of the September 30 momo:

(Begin Text)

RESTRICTED

IMMEDIATE
Ministry of Defence Production
Directorate General Defence Purchase
Pakistan Secretariat II, Rawalpindi
Telephone: 9270924
No. 1367/F-16 pkg/DGDP/FMS

30 Sep 2006


To: ODRP
--- US Embassy,
-- Islamabad

Copy to: DSCA
-- 1111 Jefferson Davis HWY
-- Arlington, VA-22202

Subject: Signing of F-16 LOAs

1. All the three F-16 Package LOAs (PK-D-SAF, PK-D-NAP,
PK-D-YAD) are being signed subject to the following
conditions: -

a. On the method and schedule of payments we request that
Pakistan Be allowed to avail clause 4.4.6 of the LOA Standard
Terms and conditions; which allows payment on delivery rather
cash prior to deliver. If this is absolutely impossible then
we suggest as an alternative, that the schedule of payments
be modified. Under the existing schedule for the 3 LOAs, out
of the total package of $2965.95 million, 83% or $2450.23
million are to be paid by 2009-10, the first four years of
the programme. This schedule will be an immense strain on
Pakistan,s fiscal and foreign exchange resources, posing
sever constraints on Pakistan,s ability to invest in the
social and fiscal infrastructure. This will jeopardize
Pakistan,s growth and poverty alleviation prospects in a
particularly challenging period. We, therefore, request that
the payment schedule be back loaded in a manner that most of
the payments fall in the last three years of the programme.

b. If during the contract process and delivery schedule of
items in the LOAs, delivery is stopped for any reason,
complete payments for the undelivered stores will be returned
to the Govt of Pakistan immediately without pre-conditions.

c. Security: With respect to the security note 64 to LOA
PK-D-SAF Note 58 of LOA PK-D-YAD and note 73 of LOA PK-D-NAP,
it is opined that whereas GOP agrees to take effective
measures to protect all US equipment in Pakistan including
F-16 aircraft, AMRAAMS, hardware and technical data, it is
considered that certain aspects of these notes and their sub
clauses are the forte and responsibility of the GOP. These
security notes therefore need further deliberation and
rationalization. It is requested that discussion for the
same may be initiated at the earliest between the two sides.

d. LOAs are being signed. Confirmation will however be
subject to approval by the Federal Cabinet of the Islamic
Republic of Pakistan.

ISLAMABAD 00019208 002 OF 002

2. As an ally that throughout its existence has always
stood by the US, whatever the challenges and risks, Pakistan
expects that its difficulties will be appreciated and the US
Government will respond positively.


/s/
Maj Gen
Additional Secretary (DP)
(Tariq Salim Malik)

(End Text.)
CROCKER

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