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Weapons, frozen chicken, and the art of diplomacy

by (c) Copyright Thomson Reuters 2011. Click For Restrictions. http://about.reuters.com/fulllegal.asp | Thomson Reuters Foundation
Monday, 7 March 2011 21:35 GMT

One cable that underlines the persistence of U.S. diplomats trying to close a deal involves weapons and lots and lots of frozen chickens.

In 2005, the Thai government started shopping for new military fighter jets among Lockheed Martin, Russia's Sukhoi and Sweden's Saab <SAABb.ST>. It made clear up front that any deal it signed had to include "countertrade" worth at least 50 percent of the deal's value -- we buy X and you help us sell Y.

For the embassy in Bangkok, winning achieved two goals: helping Lockheed and keeping the Russians from selling planes. There was, however, a small complication with the terms -- the Thai government didn't want to pay cash. Instead, it proposed trading 80,000 stockpiled tons of frozen chicken.

"Embassy contacts said that until Lockheed Martin offered a proposal to sell F-16s that included countertrade, the (Thai government) could not seriously consider its offer. Contacts also suggested that an offer that included an agreement to buy Thai chicken would be especially welcome," the embassy said in a March 2005 cable setting the scene for the competition.

A May 2005 cable indicates Thai Prime Minister Thaksin Shinawatra personally raised the bird barter issue with Admiral William Fallon, then-head of the U.S. Pacific Command. Days later, word got to Thaksin that Lockheed was willing to play ball.

"It was a negotiating tactic by Thaksin. But until relatively late in the game, Lockheed was reticent to engage. They finally agreed to talk ... but it was too late," the former U.S. diplomat in Asia said, terming the whole episode "comical" in a way.

Things didn't quite work out, though. After a military coup the new Thai government ended up buying Swedish jets, fearing it wouldn't be allowed to buy the Lockheed planes because of post-coup sanctions. (The embassy contacted the government to disabuse them of the notion, to no avail).

Lockheed declined to comment on both the fighter competition in Thailand and the proposed sale of planes in Chad.

ARMS SALES PARAMOUNT

In certain instances, weapons sales do appear to conflict with stated U.S. policy.

When the U.S. sells arms or sensitive defense technology to other governments, it requires them to affirm they will not pass on the goods to unauthorized third parties. Cables from Washington describe U.S. officials' alarm upon finding sensitive military technologies and weapons were passed into dangerous hands.

But none of those cables describe any concrete punishments for the offending countries. They also don't suggest any specific changes to the way the violators should be treated in the future.

In 2009, Secretary of State Hillary Clinton wrote to U.S. embassy officials in Cairo describing the State Department's suspicions that Egypt had violated its "end-user agreements" with the U.S. six different times over the prior three years. In one instance, Egyptian defense officials allegedly let a Chinese military delegation examine U.S.-made F-16s and related technical facilities.

Yet Clinton's only suggestion was to call for a meeting with the Egyptians to discuss ways they could better adhere to sales terms. She also conveyed the government's eagerness to keep selling weapons to Egypt.

"It is our intent to move ahead with the M1A1 tank co-production once the (Egyptian government) agrees to these (End-Use Monitoring Working Group) talks," she said in the cable. "Pending a successful meeting of the (group), we would be prepared to move forward with the F-16 acquisition as quickly as possible."

Clinton's predecessor Condoleezza Rice took a similarly vague tack in response to the discovery that light antitank weapons and grenades sold to Honduras had turned up in Mexico and Colombia.

In a 2008 cable, Rice asked U.S. officials in Honduras to remind the Honduran government of its end-user agreements with the United States and to warn the Hondurans that "failure to fulfill their obligations may jeopardize certain aspects of future bilateral security cooperation."

The State Department declined to comment on specific cases but said in an emailed response: "The United States is committed to defense trade that furthers our foreign policy and national security objectives at all steps of the process."

"We expect recipients of U.S.-origin defense articles or services to comply fully with end-use requirements, and we actively monitor compliance," it said.

ALL HAVE LIMITS

That is not to say that diplomacy never trumps commerce.

In a series of 2005 cables, the embassy in Vilnius reported back on discussions with oil major ConocoPhillips <COP.N> about the company's interest in bidding on Lithuania's only oil refinery, Mazeikiu Nafta. Yukos was forced to sell the refinery as Russian authorities hounded the company over back taxes.

Conoco's bid was a 50/50 effort with Russian oil firm Lukoil <LKOH.MM>, which according to the embassy had long been accused of illegally meddling in and corrupting Lithuanian politics.

In a Nov. 4, 2005 cable, the embassy said Conoco CEO Jim Mulva told embassy staffers he assumed all of the rumors about Lukoil's inappropriate behavior were actually true. His surprising acknowledgment that his partner was probably corrupt gave the staff pause.

"Mulva's acknowledgment of Lukoil's likely involvement in dirty deeds in Lithuania inspires little confidence in transparency under a Lukoil-CP operation. Given our broader interests here, we recommend not assuming a direct role in the competition for Mazeikiu Nafta, even if CP-Lukoil is the only 'American' contestant," the embassy staff said.

ConocoPhillips spokesman John Roper said the company declined to comment.

Ambassadors have no illusions about what their job is.

"By the time I was retired from the Foreign Service, which was 1998, things had changed fundamentally and being an active participant in the commercial program and promoting trade using the prestige of the ambassador and receptions held at the embassy or at the ambassador's residence was an important part of what I did," said Tom Niles, the former U.S. ambassador to Canada, the European Union and Greece.

Niles, a former president of the pro-trade group U.S. Council for International Business, said in most cases the U.S. ambassador is now as much a "chief commercial officer" for American business interests as they are a diplomat.

"We might have been a little bit late to the game. The Europeans understood the crucial role of foreign trade in the growth and development of their economies before we did," Niles said.

Wahba, the former UAE ambassador, concurred.

"Oftentimes European ambassadors, that's all they're there for," she said, adding it would be hard to see the reason otherwise for some countries to have embassies in the first place. (Additional reporting by Emily Flitter in New York, Mark Hosenball and Andrea Shalal-Esa in Washington and Scott Malone in Boston; editing by Jim Impoco and Claudia Parsons)

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