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Cablegate: Expanded Iran Sanctions: Impact On Us Exports to Indonesia

VZCZCXYZ0003
PP RUEHWEB

DE RUEHJA #0144 0331059
ZNR UUUUU ZZH
P 021059Z FEB 10
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC PRIORITY 4409
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS JAKARTA 000144

SIPDIS

DEPARTMENT FOR E, EAP/MTS, EEB/TRA, EEB/CBA
DEPT PASS TO EXIM, TDA, OPIC

E.O. 12958: N/A
TAGS: ECON ETRD EAIR MCC PGOV PREL BEXP PARM ETTC ID

SUBJECT: EXPANDED IRAN SANCTIONS: IMPACT ON US EXPORTS TO INDONESIA
AND US JOBS

1. The Iran Refined Petroleum Sanctions Act of 2009 (HR2194 and
S2799), if it becomes law in its current form, would have
potentially disastrous effects on our ability to export U.S. goods
to Indonesia. The proposed Act stipulates that any entity that
provides substantial support to the Iranian petroleum industry or
provides refined petroleum products to Iran would be subject to
sanctions, including the prohibition of ExIm financing. Pertamina,
a state-owned enterprise (SOE), may be involved in such activities.
A very narrow reading of the legislation could mean that all
state-owned enterprises would be affected. This could have a
serious impact on financing available to Indonesian SOEs,
jeopardizing both U.S. jobs and hundreds of millions of dollars in
U.S. exports, including a $120 million Presidential jet. SOEs
account for an estimated 40% of the Indonesian economy and an
enormous share of U.S exports to Indonesia. If we forfeit the level
playing field ExIm provides, we cede this market to our foreign
competition.

2. In Indonesia, ExIm has been key in securing high-value U.S.
exports of Boeing airplanes and Bell helicopters. ExIm financing
has made possible an estimated $400 million in Boeing sales to
state-owned carrier Garuda in recent years. A pending ExIm-financed
deal for a Presidential jet is worth $120 million to Boeing and
Northrop Grumman. Real sales opportunities also exist here for U.S.
air-traffic control systems and security equipment as well as
military aviation equipment and services.

3. Indonesia is also a huge market for GE and EMD locomotives. One
pending deal for 150 locomotives with PT Kereta-Api (PTKA), the
state owned railway, has the potential to create 500 new US jobs.
The possibility of ExIm financing is a major factor for the U.S.
companies bidding on this deal.

4. ExIm financing allows U.S. vendors to effectively compete
against Chinese, Korean and European companies who often have access
to government financing at rates well below those commercially
available. We have enjoyed a competitive advantage in Indonesia in
recent years, but absent ExIm support, foreign competitors will step
in to fill the void.


OSIUS


Drafted: ECON: EPERRY X9070
Cleared: ECON: DJUNKER (ok)
ECON: TSAEGER (ok)
ODC: JROBINSON (ok)
POL: DZOTTER (ok)
FCS: JKAESSHAEFER (ok)

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