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

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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
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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
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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

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2002ROME02977 - Classification: CONFIDENTIAL