The Pakistan Air Force (PAF) has requested $1 billion in additional FMF support for the F-16 program

197576 3/18/2009 4:27:00 PM 09ISLAMABAD586 Embassy Islamabad CONFIDENTIAL 09ISLAMABAD177 VZCZCXRO3014OO RUEHLH RUEHPWDE RUEHIL #0586/01 0771627ZNY CCCCC ZZHO 181627Z MAR 09FM AMEMBASSY ISLAMABADTO RUEHC/SECSTATE WASHDC IMMEDIATE 1940INFO RUEHBUL/AMEMBASSY KABUL PRIORITY 0033RUEHLO/AMEMBASSY LONDON PRIORITY 9923RUEHNE/AMEMBASSY NEW DELHI PRIORITY 4660RUEHKP/AMCONSUL KARACHI PRIORITY 1306RUEHLH/AMCONSUL LAHORE PRIORITY 6969RUEHPW/AMCONSUL PESHAWAR PRIORITY 5896RHMFISS/CDR USCENTCOM MACDILL AFB FL PRIORITYRUEKJCS/JOINT STAFF WASHINGTON DC PRIORITYRUEKJCS/SECDEF WASHINGTON DC PRIORITYRUEAIIA/CIA WASHDC PRIORITY

C O N F I D E N T I A L SECTION 01 OF 03 ISLAMABAD 000586

SIPDIS

E.O. 12958: DECL: 08/04/2018 TAGS: PREL, PTER, PGOV, MARR, MOPS, PK

SUBJECT: SAVING THE F-16 PROGRAM

REF: ISLAMABAD 177 AND PREVIOUS

Classified By: Anne W. Patterson, for reasons 1.4 (b)(d)

1. (C) Summary. Pakistan is the most important front-line state in our battle against extremists who threaten the U.S. and our allies. In post's view, preserving the F-16 program, which is the flagship symbol of post 9/11 bilateral re-engagement, is critical to our goals of enabling Pakistan to combat militants so U.S. troops will not have to, protecting essential fuel/cargo shipments in support of our troops in Afghanistan, and buying time to deter escalation of possible any Indo-Pak conflict.

2. (C) Although the economy is stabilizing, we do not believe the GOP has or will find the $2 billion plus required to complete the entire F-16 program without help and/or alterations to the program. Post's position is that we should deliver the aircraft that most cost-efficiently meet Pakistan's need to fight militants in the tribal areas, i.e. the 35 mid-life upgrade (MLU) aircraft. We share State's view that we should not press for unlikely congressional support to pick up the entire price tag for new and MLU aircraft; however, we may wish to ask Congress to consider extending support for the mid-life upgrade, conditioned on GOP agreement for additional Close Air Support training in support of counter-insurgency operations.

3. (C) While we understand New Delhi's opposition to the program, the reality is that this program will not degrade India's overwhelming air superiority over Pakistan. Reducing the munitions package will not significantly affect either costs or regional stability. We have and will deny arms sales that we believe would upset the regional balance of power, as we have with the recent GOP request to buy the Coastal Targeting Suppression System, which enables Harpoon missiles to be fired at land or near-land targets using GPS technology.

4. (C) The Pressler Amendment sanctions that prevented the Clinton Administration from delivering 28 Peacegate F-16 aircraft that Pakistan purchased left a long and bitter legacy that we do not want to repeat, especially not now when we need Pakistan's cooperation to fight extremism that threatens us both. We believe the foreign policy consequences of the U.S. reneging on our contract obligations to sell 18 new aircraft--essentially repeating the Peacegate history--will be extremely negative; therefore, we recommend that we place the impetus on the Pakistanis to make the hard choices about scaling back or delaying the new buy. We defer to Washington but believe production line alterations could be made to satisfy U.S., Pakistani, Moroccan and Turkish equities. We need to sit down soonest with the Pakistanis and discuss the implications of payment defaults on its FMF program. End Summary.

5. (C) What is broadly referred to as the "F-16 case" is really three individual cases: (1) a Foreign Military Sales (FMS) program purchase of 18 new aircraft, to be paid for entirely with Pakistani funds; (2) Renovation (Mid-Life Upgrade) on 35 of Pakistan's fleet of 46 older F-16s, which include aircraft acquired through the Excess Defense Articles (EDA) program, to be paid partially with FMF funding; and, (3) a $641 million munitions case, to be purchased using Pakistani national funds. The Pakistanis also will have to pay $80 million to install the upgrade kits in Turkey and more than $125 million to build and secure a separate F-16 base because of USG concerns about potential technology transfer to China. See reftel for case specifics.

Overcoming the Trust Deficit

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6. (C) The F-16 package is the flagship symbol of renewed post 9/11 engagement with the Pakistani military. It is difficult to over-emphasize the certain negative foreign policy effects of U.S. cancellation in the wake of the Peacegate F-16 debacle, when the Pressler Amendment sanctions in 1990 prevented the Clinton Administration from delivering 28 F-16 aircraft that Pakistan had purchased with its own money. Nearly every Pakistani military officer can cite chapter and verse of the Pressler Amendment as evidence of the fickleness of U.S. policy. We not only refused to

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deliver the aircraft that Pakistan had paid for, but demanded that Pakistan pay demurrage charges for storing them; finally, in 1998, the USG agreed to repay Pakistan $658 million it had paid for the Peacegate F-16s.

7. (C) Increasing trust with the military is the basis for the security pillar of our counter-insurgency strategy, i.e., expanding Frontier Corps training, special forces (SSG) training, Close Air Support training, cooperation to reduce cross-border attacks, and using/building additional Border Coordination Centers to enhance intelligence cooperation in support of combat operations. The new Air Force chief, Air Chief Marshall Suleman, is pro-American, and he "gets it" on counter-insurgency strategy. F-16 pilots are PAF's best and brightest; they offer us the best opportunity to reshape Pakistan Air Force counter-insurgency (COIN) doctrine and tactics. If we cancel the new buy, however, Suleman will have little incentive to cooperate with us. We should note that punishing the Air Force by canceling the new buy will not pressure the Army into greater cooperation on training; it will have the opposite effect of increasing distrust.

Enhancing Pakistani COIN Capability

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8. (C) Our goal is to enable Pakistan to fight the militants using Pakistani safe havens so that we will not have to deploy U.S. troops to do the job. Post agrees that F-16s are not the ideal tool for targeting militants and we are working to enhance Pakistan's combat helicopter fleet/capabilities. In the meantime, however, there are few other options. Pakistan already is using its F-16s in counter-insurgency (COIN) operations in the tribal areas, but its inability to executive precision targeting or fly at night creates counter-productive civilian casualties and minimizes operations. The new/MLU aircraft and their munitions packages (with JDAMs and GBUs) will improve Pakistan's precision strike and night vision capability. Through the Torkham BCC/Joint Coordination Center, we are enhancing Pakistan's ability to collect intelligence in support of ground and air combat operations in FATA. But Pakistan still needs an adequate number of new/MLU F-16s to better execute many of these operations.

9. (C) If our goal is to press the Army to change strategy and redeploy forces from the Indian border, punishing the Air Force by canceling this sale will not help us. It will emphasize that we favor maintaining Indian superiority at Pakistan's expense and feed anti-Americanism throughout the military.

Maintaining Cargo Operations

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10. (C) Approximately 30 percent of the fuel and 70 percent of the dry cargo required to support U.S. troops in Afghanistan transits Pakistan. As we implement a troop surge in Afghanistan, we will more than double the amount of supplies transiting Pakistan. Despite new agreements to trans-ship through northern routes, access to Pakistani ports and roads is crucial to our success in Afghanistan. The increased shipments, particularly at Chaman, Balochistan, will require a high degree of Pakistani cooperation.

Regional Stability

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11. (C) To overcome overwhelming Indian military superiority, Pakistan developed both its nuclear/missile program and its air power. F-16 aircraft, armed with AMRAAMS, essentially buy time to delay Pakistan considering the nuclear option in a conflict with India. Given India's overwhelming military superiority, this would only be a few days, but these days would allow critical time to mediate and prevent nuclear conflict.

12. (C) India enjoys an almost 2-1 advantage (736 to 370) over Pakistan in advanced multi-purpose fighters. Pakistan's shortfalls in training and tactics multiply India's edge. Pakistan also plans to buy/jointly produce 150 inferior JF-17 fighters from China, but it is unclear how they will pay for them. Meanwhile, India plans to acquire 126 multi-purpose fighters (F-18 or equivalent) that will give the GOI

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significant new technologies and further expand its air superiority over Pakistan.

13. (C) The sale of new aircraft and 500 AMRAAM missiles would give Pakistan beyond visual range capability, but Pakistan will acquire the ability to employ this capability with either the new buy or MLU aircraft. Canceling the new buy would thus only delay the process by 18 months. Successful employment of this capability by the PAF, however, will take 2-3 years and a significant revision of doctrine and tactics. The Indian Air Force already routinely trains on existing beyond visual range tactics.

14. (C) We do deny Pakistan requests for arms sales that could upset the regional balance of power. Post on February 20 recommended that Washington disapprove Pakistan's request to buy the Coastal targeting Suppression System, which gives AGM-84 Harpoon ship missiles the capability of hitting land targets; this acquisition would have given Pakistan an overt offensive capability to threaten India and served no COIN purpose.

Building Civilian Control of the Military

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15. (C) Pakistan's civilian leaders want increased economic assistance, but they need to demonstrate to the military the benefits of supporting USG policies through continued delivery of defense programs. The Pakistan Air Force (PAF) has requested $1 billion in additional FMF support for the F-16 program because they: (a) believe we will pay; and, (b) do not want to confront a Pakistani civilian government struggling to implement budget cuts required by an IMF Standby Agreement. Our goal is to prevent another cycle of military interventions in Pakistan, and we should consider how much pressure we want to place on a Zardari/Gilani government that is rebuilding civilian-military relations after nearly nine years of military rule.

16. (C) Officially suggesting that the Pakistanis use Coalition Support Funds (CSF) would, post believes, create issues over congressional intent and undermine our efforts to increase transparency in the CSF process. Money is indeed fungible, but the civilian government needs cash to meet its balance of payments needs.

Bottom Line

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17. (C) Post agrees with State that it is unlikely we will/should convince Congress to use FMF to pick up the tab for the entire F-16 program. Given Pakistan's importance to our foreign policy goals, however, we should consider asking for additional support for the MLU program. We strongly oppose outright U.S. cancellation of the new buy and instead recommend that we put the onus on the Pakistanis to make the hard choices about how to restructure the payment and delivery schedules for the new aircraft. We defer to Washington but believe some adjustments to the production line for the new aircraft could be made to preserve U.S., Pakistani, Moroccan and Turkish equities. Most importantly, we need to have a serious discussion with Pakistan about the future of the program and possible stop-work action and its consequences for its FMF program if Pakistan defaults on payments.

PATTERSON