ECMIN delivered points regarding the launch from India of the Italian AGILE satellite, and the related, unlicensed re-export from Italy to India of USML-listed items (ref A), to the MFA official responsible for Space and Science and Technology Cooperation.

110065,5/29/2007 16:16,07ROME1168,Embassy Rome, CONFIDENTIAL, 07 SECSTATE 71981,"VZCZCXRO9012PP RUEHFL RUEHNPDE RUEHRO #1168/01 1491616 ZNY CCCCC ZZHP 291616Z MAY 07FM AMEMBASSY ROMETO RUEHC/SECSTATE WASHDC PRIORITY 8164INFO RUEHFR/AMEMBASSY PARIS PRIORITY 2268RUEHNE/AMEMBASSY NEW DELHI PRIORITY 0774RUEHFL/AMCONSUL FLORENCE PRIORITY 2405RUEHMIL/AMCONSUL MILAN PRIORITY 8676RUEHNP/AMCONSUL NAPLES PRIORITY 2569","C O N F I D E N T I A L SECTION 01 OF 02 ROME 001168

SIPDIS

SIPDIS

STATE PASS TO PM/DTCP DIRECTOR ANN GANZER STATE ALSO FOR EUR/WE AND OES/SAT PARIS PASS TO NASA REP - D. MILLER

E.O. 12958: DECL: 05/29/2017 TAGS: ETTC, KOMC, PARM, TSPA, IT, IN

SUBJECT: DEMARCHE: AGILE LAUNCH; PROTEST OF USML TRANSFER TO INDIA

REF: A. SECSTATE 71981 (NOTAL)

B. NEW DELHI 2455 (NOTAL) C. ROME 310

Classified By: ECMIN T. DELARE PER E.O. 12958 REASONS 1.4 (B) AND (D)

1. (C) SUMMARY: On May 29, ECMIN delivered points regarding the launch from India of the Italian AGILE satellite, and the related, unlicensed re-export from Italy to India of USML-listed items (ref A), to the MFA official responsible for Space and Science and Technology Cooperation. The latter responded that in the year preceding AGILE's April 23 launch, the MFA had arranged meetings in Washington and Rome to clarify the U.S. regulations. The MFA Director General for Multilateral Economic and Financial Affairs (The MFA's equivalent to ""E"") also had advised the Italian Space Agency (ASI) and the Ministry of Universities that launching AGILE from India could have negative consequences for bilateral economic relations. Our interlocutor explained that the MFA does not have ""hierarchical"" authority over ASI or the Ministry of Universities and Research, and could not force them to follow the MFA's counsel. He added that the decision to proceed with the AGILE launch was taken while ASI was being run by an interim External Commissioner, prior to the entry on duty on April 26 of ASI President Giovanni Bignami. Emboffs have appointments on May 30 and May 31 to deliver the same message to the Ministry of Universities and Research and ASI in advance of NASA Deputy Administrator Shana Dale's June 1 meeting with ASI President Bignami. Results of those meetings will be reported septel. END SUMMARY.

2. (C) On May 29, ECMIN Thomas Delare delivered ref A points to Minister Giovanni Manfredi, Head of Office VI (Energy, Space, S&T Cooperation, Information Society, and Nuclear Issues) of MFA's Directorate General for Multilateral Economic and Financial Affairs. Delare underlined that while the Department had not yet compiled all the facts of the case, the USG considered the matter of AGILE's India launch so serious as to warrant a strongly worded protest. He also pointed out that Italian press coverage had been unhelpful, noting one report in a major daily that appeared to downplay USG's concerns without explaining them to Italian readers and a brief article in a popular weekly newsmagazine that spun the episode into a case of ""little but tough"" Italy resisting an American attempt to restrict Italian research. ECMIN placed the AGILE problem in the larger context of Italy's export control enforcement, noting previous USG dissatisfaction with the GOI's handling of fast boat (and engines) exports to Iran. Looking ahead, Delare proposed holding bilateral consultations on export controls, in order to air mutual concerns and prevent future exports that might damage otherwise good bilateral relations.

3. (C) Manfredi responded by outlining MFA attempts to ensure that USG export control regulations were made clear to and respected by the Italian Space Agency (ASI), responsible for AGILE. He recalled the Italian Embassy's participation in meetings between Department and representatives of Carlo Gavazzi Spazio in 2006, as well as the April 10, 2007 meeting (which ECMIN attended) in which the MFA brought together Embassy officers and representatives from the MFA, ASI, and the Ministry of Universities and Research (the agency to which ASI reports) to review AGILE's status. Manfredi emphasized that the MFA was so concerned about possible violations of U.S. export control regulations that the Italian Embassy in Washington then arranged two meetings/conversations, one at the ambassadorial level, with Department representatives. He confirmed that following the last Italian Embassy-Department contacts, MFA Director General Giandomenico Magliano wrote ASI and the Ministry of Universities and Research to explain the potential negative consequences to economic bilateral relations should ASI launch AGILE from India with USML components on board, and advising that MFA considered it unwise to proceed with the launch.

4. (C) Manfredi made little attempt to defend ASI and/or the Ministry of Universities' decision to authorize AGILE's Indian launch, disregarding MFA's counsel. He explained that the MFA has no authority over either the Agency or the Ministry. Manfredi noted that at the time the final decision on AGILE was made, External Commissioner Vincenzo Roppo was in charge of the space agency in the interregnum between former President Sergio Vetrella's resignation in October and ROME 00001168 002 OF 002 current ASI President Giovanni Bignami's entry on duty on April 26, three days after AGILE's launch. With Vetrella's resignation, ASI's Management Board stepped down, removing another layer of control over ASI's activities. ECMIN noted that we would be meeting separately with President Bignami and with the Ministry of Universities and Research to deliver the same protest.

5. (C) Manfredi pushed back, without going into detail, noting the MFA's perception that the State Department's Export Control bureau handled Carlo Gavazzi Spazio's export license requests in a ""confusing"" way in 2005-2006. The Department's directed disclosure order to the Goodrich company was in order, he said, since a good deal of what Carlo Gavazzi Spazio did was based on assurances from Goodrich, including a shipping order, which appeared to give the go-ahead for re-transfer of the USML component (the reaction wheel assembly) to India. While not saying openly that Carlo Gavazzi and ASI acted in good faith according to the paperwork received from Goodrich, Manfredi opined that they probably did not deliberately violate U.S. export control regulations, given their efforts to remove other USML components originally ordered or procured for AGILE -- which delayed AGILE's launch for over a year and resulted in substantial financial losses for ASI and the company.

6. (C) Manfredi reinforced his message -- that the MFA has treated U.S. concerns seriously throughout this process. He told ECMIN that he accompanied MFA Director General Giandomenico Magliano to meet ASI President Bignami on May 25, where the DG delivered the message that ASI should consult with the MFA to avoid any potential problems in the future. Manfredi also said he would brief the MFA's member of ASI's new Management Board in the near future.

7. (C) COMMENT. Although we have follow-up meetings scheduled with ASI and the Ministry of Universities and Research, we are fairly sure they will repeat the essence of Manfredi's position -- that ASI and Carlo Gavazzi acted based on assurances from Goodrich that re-export of the USML items to India was authorized and that, the USG's concerns notwithstanding, the decision to go ahead with the launch was made by ASI's interim External Commissioner, who has since left ASI. This case highlights the need for bilateral export control consultations, which were last held in 2004. Post hereby repeats its request (ref C) for Department guidance on the possibility of bilateral consultations. END COMMENT.

Spogli