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Viewing cable 10JAKARTA144, EXPANDED IRAN SANCTIONS: IMPACT ON US EXPORTS TO INDONESIA

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Reference ID Created Released Classification Origin
10JAKARTA144 2010-02-02 10:59 2011-08-24 01:00 UNCLASSIFIED Embassy Jakarta
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)