ITALY'S NUANCED POLICY ON DUAL USE EXPORTS TO IRAN

C O N F I D E N T I A L ROME 002977 SIPDIS NP/ECS, NEA/NGA, EUR/PRA, EUR/WE E.O. 12958: DECL: 06/18/2007 TAGS: PREL PARM ETTC ETRD IR IT EXPORT CONTROLS SUBJECT: ITALY'S NUANCED POLICY ON DUAL USE EXPORTS TO IRAN CONFIDENTIAL PAGE 02 ROME 02977 181713Z REF: (A) STATE 104462 (B) ROME 2257 (C) STATE 64844 CLASSIFIED BY: CLASSIFIED BY ECOUNS KAREN MILLIKEN; REASON 1.5 B/D. ¶1. (C) SUMMARY AND ACTION REQUEST. ITALY INSISTS ITS POLICY PROHIBITING SALES OF WEAPONS AND SENSITIVE DUAL USE ITEMS REMAINS FULLY IN FORCE. HOWEVER, MFA'S NONPROLIFERATION COORDINATOR FLAGS A POTENTIAL LEGAL VULNERABILITY IN THE POLICY BROUGHT ABOUT BY THE UNITED NATIONS' FAILURE TO ADOPT A RESOLUTION THIS YEAR CRITICAL OF IRAN'S HUMAN RIGHTS RECORD. MFA ASSURES US THAT NO ITALIAN COMPANIES HAVE APPLIED TO EXPORT ITEMS (REF A) THAT COULD AID IRANIAN COVERT NUCLEAR ACTIVITIES. AN INVESTIGATION INTO PROPOSED EXPORTS OF SPEED BOATS AND BOAT ENGINES (REF B) CONTINUES. SEE ACTION REQUEST PARA 7. END SUMMARY AND ACTION REQUEST. ¶2. (C) ITALY HAS LONG EMBARGOED EXPORTS TO IRAN OF ARMS AND SENSITIVE DUAL USE ITEMS, MFA'S NONPROLIFERATION ISSUES COORDINATOR UGO DE MOHR REMINDED ECONOFF DURING A JUNE 14 MEETING. HE SAID, THOUGH, THAT THE POLICY COULD BE VULNERABLE TO LEGAL CHALLENGE IN THAT IT DERIVES FROM THE MANDATE OF ITALIAN PUBLIC LAW 1085 THAT SUCH ITEMS CANNOT BE EXPORTED TO ANY NATION TARGETED BY A UN HUMAN RIGHTS RESOLUTION. THIS YEAR'S RESOLUTION HAVING FAILED TO PASS NOTWITHSTANDING EU SUPPORT FOR IT, DE MOHR NOTES THAT THE POLICY TECHNICALLY LACKS A LEGAL JUSTIFICATION. ALTHOUGH HE EXPECTS NO PUSH FOR A POLICY CHANGE FROM WITHIN THE GOI, HE POINTS OUT THAT ITALIAN COMPANIES AGGRIEVED BY DECISIONS DENYING LICENSES FOR EXPORTS TO IRAN COULD APPEAL TO ITALIAN COURTS, WHICH WOULD BE HARD-PRESSED TO UPHOLD THE DENIAL. AS A PRACTICAL MATTER, HE QUICKLY ADDED, JUDICIAL APPEALS OF GOI CONFIDENTIAL PAGE 03 ROME 02977 181713Z DECISIONS ON EXPORT LICENSES ARE VERY RARE; GENERALLY EXPORTERS DON'T LOOK TO ANTAGONIZE THE LICENSING AUTHORITY. ¶3. (C) COMMENT. DE MOHR HAS SAID IN THE PAST THAT HE DOES NOT AGREE WITH THE ASSERTION (REPEATED REF C) THAT WASSENAAR MEMBERS HAVE NECESSARILY COMMITTED TO REFRAIN FROM ARMS SALES TO IRAN. HE BELIEVES THE WASSENAAR LANGUAGE IS INTENTIONALLY VAGUE ON POINT, REFLECTING A LACK OF CONSENSUS AMONG EARLY WA DELEGATES. THE UN RESOLUTIONS AGAINST IRAN IN PREVIOUS YEARS HAVE FED INTO THE "CATCH HUMAN RIGHTS" PROVISION OF ITALIAN PUBLIC LAW 1085 TO GET ITALY TO THE SAME PLACE; I.E., TO PROHIBITING ARMAMENT EXPORTS (AS WELL AS SENSITIVE DUAL USE EXPORTS) TO IRAN. ITALY THEREFORE HAS NEVER HAD TO DECIDE WHETHER WASSENAAR'S "COUNTRIES OF CONCERN" REFERENCE CONTEMPLATES IRAN AND WHETHER THE REFERENCE HAS ANY LEGAL EFFECT UNDER ITALIAN LAW. END COMMENT. ¶4. (C) ON THE IMMEDIATE ISSUE OF THE EXPORT OF ITEMS LISTED REF A AS POTENTIALLY DESTINED FOR IRAN'S COVERT NUCLEAR PROGRAM, DE MOHR SAID NO ITALIAN COMPANIES HAVE APPLIED TO THE GOI FOR RELEVANT LICENSES. AS CHAIR OF THE INTERMINISTERIAL DUAL USE LICENSING COMMITTEE, HE IS CONFIDENT ANY EFFORT TO EXPORT LISTED ITEMS WOULD COME TO HIS ATTENTION. HE SAID HE WOULD SHARE REF A NONPAPER WITH KEY COLLEAGUES ON THE COMMITTEE. ¶5. (C) DE MOHR SAID HE HAS TALKED RECENTLY WITH THE ITALIAN COMPANIES LOOKING TO EXPORT BOATS AND BOAT ENGINES TO IRAN (FABBIO BUZZI DESIGN AND ISOTTA FRANCHINI) PER REF B. HE DESCRIBED HIS IMMEDIATE ROLE AS DECIDING WHETHER THE BOATS INVOLVED ARE WARSHIPS. IF HE CONCLUDES THEY ARE, HE WILL CONFIDENTIAL PAGE 04 ROME 02977 181713Z PASS THE FILE TO THE MFA OFFICE THAT CONSIDERS REQUESTS FOR ARMAMENT EXPORTS (UAMA) WHICH, HE IS CERTAIN, WOULD NIX THE EXPORT NOTWITHSTANDING THE ABSENCE OF A CURRENT UN RESOLUTION CRITICAL OF IRAN'S HUMAN RIGHTS RECORD. ¶6. (C) ON THE OTHER HAND, IF DE MOHR CONCLUDES THAT THE BOATS AND BOAT ENGINES ARE DUAL USE ITEMS, HE WILL BRING THE CASE TO INTERMINISTERIAL COMMITTEE TO DECIDE BASED ON AVAILABLE EVIDENCE AS TO END USE. HE ASKED WHETHER THE USG CONSIDERS COAST PATROLLING TO BE AN INHERENTLY MILITARY FUNCTION AND WHETHER THE U.S. COAST GUARD AND ITALIAN GUARDIA DI FINANZIA ARE PURELY MILITARY ORGANIZATIONS. ECONOFF REPLIED, PER REF C, THAT THE DESIGN OF THE HIGH SPEED BOATS AND THE POWER OF THE ENGINES UNDER CONSIDERATION ARE MORE CONSISTENT WITH OFFENSIVE AND SPECIAL OPERATIONS ACTIVITIES THAN WITH CONVENTIONAL PATROLLING. ¶7. (C) COMMENT AND ACTION REQUEST. DE MOHR IS CLEARLY STRUGGLING WITH THE PATROL BOAT AND ENGINE CASES. AS HE REVIEWS THE PROPOSED EXPORTS WITH THE INVOLVED ITALIAN COMPANIES, HE WILL COME UNDER PRESSURE TO SEE THESE ITEMS AS LEGITIMATE ASPECTS OF ITALY'S ROBUST TRADE WITH IRAN. IF COMPELLING TECHNICAL ARGUMENTS ARE AVAILABLE (E.G., SPEED CAPACITY IS EXCESSIVE FOR CONVENTIONAL PATROL BOATS, OTHER BOAT DESIGNS ARE MORE APPROPRIATE TO PATROLLING, ETC.),WE COULD PUT THEM TO GOOD USE. SEMBLER CONFIDENTIAL > 2002ROME02977 - Classification: CONFIDENTIAL