Foreign Relations of the United States, 1977–1980, Volume XXVII, Western Europe

269. Memorandum From Secretary of State Vance to President Carter¹

Washington, August 11, 1978

SUBJECT

• Request for an Arms Policy Exception for Jet Engines for Sweden

I. Issue

Sweden wants to purchase U.S. jet engine technology to use in future military aircraft. The proposed jet engine program under review envisages eventual production in Sweden of the entire engine or at least major engine components. Approval of such a program would require that you determine a policy exception to the arms transfer policy guidelines you issued on May 19, 1977.² The purpose of this memorandum is to recommend that you grant such an exception for this jet engine program on the grounds that the transfer will contribute to our national security interests.

II. Discussion

Sweden is developing an attack/trainer aircraft called the B3LA as one of two follow-ons to the Viggen and is considering three engines to power this aircraft: a 10,000 pound thrust (non-afterburning) version of the General Electric (GE) 404 engine, which will power the F–18; the 14,500 pound thrust (non-afterburning) version of the Pratt and Whitney (P&W) F–100 engine, which is operational and powers the F–15 and F–16; and the British Turbounion RB–199 engine, which powers the FRG/UK/Italy TORNADO. The Navy model of the GE 404 engine is scheduled for certification in mid-1979, with production in early 1980; the F–18 is due to become operational in March 1981. Both U.S. engines are “major defense equipment” and, under Section 38 (b) (3) of the Arms Export Control Act, any sale of $7 million or more to Sweden would have to be made under Foreign Military Sales procedures.

Sweden has been given technical data to evaluate the GE 404 and P&W F–100. To make fundamental decisions on the B3LA program, the Swedish Defense Minister now wants to know whether these engines will be made available by the U.S. for development and eventual coproduction in Sweden. The Defense Department expects that production in Sweden will not exceed 35–40 percent of the component parts of the engine selected. Approval of coproduction of this engine will be the first such exception under your arms control policy for a sophisticated, high technology item.

Factors in Favor of Approval

— Sweden is by far the strongest Western military force in Northern Europe. Although not a member of NATO, Sweden is an important factor in NATO planning and defense;

— Sweden’s continued ability to deny its territory and air space to the USSR will greatly simplify the defense of Northern Norway, and allow additional time for allied reinforcement of that area;

— Sweden invests more per capita ($343) on defense than any other Western European nation. Its defense budget is equal to those of Norway, Denmark, and Finland combined. It maintains an air force of 500 combat aircraft, just slightly less than the United States Air Force in Europe, but with a much higher sortie rate than the USAF;

— One mission of the B3LA aircraft will be to attack Soviet tanks;

— Approval would be consistent with our long-standing policy of supporting Swedish defense forces through the provision of sophisticated U.S. military systems and technology;

— Approval would help to offset the negative impact on our relations with Sweden resulting from our refusal to permit sale of the Swedish Viggen aircraft to India, because of our policy of arms restraint in the sub-continent and the fact that we would not sell equivalent aircraft to India or Pakistan.³

Factors for Denial

— The GE 404 engine is still in the development stage (first flight in September 1978). Both the GE 404 and P&W F–100 involve the most advanced U.S. jet engine technology and until now, our policy has been not to allow first line aircraft engines to be included in any foreign-built military aircraft except those coproduced by NATO allies.

— The proposal envisages some form of coproduction abroad, and the GE 404 engine will not be operationally deployed with U.S. forces until early 1981.

— This first exception to policy to permit the proposed coproduction in Sweden will be viewed as a precedent by other nations. It could increase pressure for similar exceptions for production of advanced weapons systems in Israel, Iran, Switzerland, and Spain among others.

— Though our approval would be for Swedish use only, because of Sweden’s limited absorptive capacity, production of the B3LA aircraft is likely to be uneconomical without third country sales. Therefore, Sweden might request U.S. authorization for such exports in the future.

— In addition, ACDA comments that in the event of denial, Sweden would turn to European sources for engines, presumably the UK RB–199. This would clearly demonstrate that the U.S. arms restraint policy can represent to other major suppliers real economic benefits that justify their cooperation with us in maintaining restraint.

Recommendation:

Notwithstanding the negative elements in this proposal, I recommend that you authorize an exception to our arms policy guidelines established pursuant to PDM–13⁴ on the grounds that these jet engine programs with Sweden are in the national security interest of the United States. This action would be in accordance with the policy stated in PDM–13 that the United States will continue to utilize arms transfers to promote our security and that of close friends, and that exceptions may be granted to friendly countries to maintain regional balance. To protect U.S. technology and restrict retransfer of the engine, approval would be subject to the following written conditions:

1. That U.S. technology would be provided on a phased basis to ensure control of sensitive technology. Swedish manufacture of high temperature or high pressure components of either U.S. engine would not be considered until such technology is determined to be releasable to NATO.

2. That approval of U.S.–Swedish cooperation on any of the engines does not obligate the USG to continue development, to enter into production, to deploy with U.S. forces or to proceed with further bilateral exchanges in the event of a USG program cancellation.

3. That partial or complete production of the GE 404 engine in Sweden could not begin until it has entered the operational inventory of the U.S. forces.

4. That the aircraft engines and technology are supplied for use only by the Swedish armed forces and not for the purpose of export to third countries.

5. That development of any advanced versions of U.S. engines involving technology beyond the level approved must be approved by the USG prior to initiation.⁵

1. Source: Carter Library, National Security Affairs, Brzezinski Office File, Box 49, Sweden. Confidential.
2. Reference is to Presidential Decision 13 on conventional arms transfer policy, May 13, 1977, which Carter announced on May 19, 1977. See Foreign Relations, 1977–1980, Volume XXVI, Arms Control and Nonproliferation, Document 271, and “Conventional Arms Transfer Policy; Statement by the President,” Public Papers: Carter, 1977, pp. 931–932.
3. In a May 11 memorandum to Carter, Vance informed him that he had decided to deny Sweden’s request to sell Viggen aircraft to India. (Carter Library, Plains File, Box 13, State Department Evening Reports, 5/78) In an undated comment on a May 18 memorandum from Treverton to Aaron, Blackwill wrote: “Viggen is only a problem because of our own Congressional laws and restraint policy. It won’t win the competition, won’t decide whether India gets a deep penetration strike aircraft—and if it does, won’t mean diddly-squat in terms of ‘stability,’ etc. Somehow, we have to be able to let some people sell in cases where we wouldn’t/don’t want to. RB.” (Carter Library, National Security Affairs, Brzezinski Material, Country File, Box 73, Sweden: 1/77–6/80)
4. Reference is apparently to Presidential Directive 13; see footnote 2 above.
5. Carter did not indicate his decision on this recommendation. In a September 20 memorandum, Brzezinski informed Brown and Vance that Carter had approved the decision to grant Sweden an exception to PD–13 under the conditions proposed in Vance’s August 11 memorandum. (Carter Library, National Security Affairs, Brzezinski Office File, Box 49, Sweden)