Identifier
Created
Classification
Origin
04ROME1594
2004-04-23 11:17:00
SECRET
Embassy Rome
Cable title:  

BRIEFING ITALY ON MILITARY/DUAL-USE PROCUREMENT

Tags:  ETTC EIND PARM PREL IT IR EXPORT CONTROLS 
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S E C R E T ROME 001594 

SIPDIS


STATE FOR EUR/WE, EUR/PRA, INR/SPM, NEA/NGA, PM/RSAT,
PM/DTCP

E.O. 12958: DECL: 04/21/2014
TAGS: ETTC EIND PARM PREL IT IR EXPORT CONTROLS
SUBJECT: BRIEFING ITALY ON MILITARY/DUAL-USE PROCUREMENT
EFFORTS BY STATE SPONSORS: FAST BOATS TO IRAN AT CENTER OF
DISCUSSION

REF: ROME 776

Classified By: Economic Minister-Counselor Scott Kilner for Reasons 1.5
(a)(b)(d) and 1.6 x6

SUMMARY
-------

S E C R E T ROME 001594

SIPDIS


STATE FOR EUR/WE, EUR/PRA, INR/SPM, NEA/NGA, PM/RSAT,
PM/DTCP

E.O. 12958: DECL: 04/21/2014
TAGS: ETTC EIND PARM PREL IT IR EXPORT CONTROLS
SUBJECT: BRIEFING ITALY ON MILITARY/DUAL-USE PROCUREMENT
EFFORTS BY STATE SPONSORS: FAST BOATS TO IRAN AT CENTER OF
DISCUSSION

REF: ROME 776

Classified By: Economic Minister-Counselor Scott Kilner for Reasons 1.5
(a)(b)(d) and 1.6 x6

SUMMARY
--------------


1. (S) INR Analyst Dr. Thomas Zarzecki, EUR/PRA officer Mark
Cassayre, and Emboffs met with Italian officials March 30 to
provide an intelligence briefing on military/dual-use
procurement efforts in Europe by Iran and other state
sponsors of terrorism. The briefing included information
about the threat to Coalition forces in the Persian Gulf
posed by such acquisitions and offered examples of how other
European states have halted similar transfers to Iran. The
goals of the briefing were to reiterate USG concerns,
encourage greater GOI flexibility towards stricter controls
over exports of concern, and highlight the potential impact
of the example set by Italy on broader conventional arms
non-proliferation efforts in Europe.


2. (S) The USG team met with policy makers from the MFA, MOD,
Ministry of Productive Activities (MPA),and the Prime
Minister's office -- all key players in the GOI's efforts to
address the transfer of FB Design fast boats to Iran. Italian
officials were grateful for the briefing and welcomed further
dialogue with USG policy, intelligence, and defense trade
control representatives. Our interlocutors confirmed that
the GOI had halted the export of the last fast boat to Iran.
They highlighted, however, the ongoing constraints of Italian
law in halting the transfers of items not subject to
multilateral sanctions or regimes, like the fast boats.
Nevertheless, the GOI's interagency Consultative Committee on
Dual-use Goods Exports was studying potential new legal
mechanisms to block future transfers of such items. They also
suggested that such exports be addressed in the Wassenaar
Arrangement or other multilateral fora. End summary.

Facing a Tough Challenge With Open Minds...
--------------


3. (S) Interlocutors from the Prime Minister's office, MFA,

and MPA welcomed the briefing and listened intently. They
said the GOI took seriously the threat posed by certain
articles going to military end-users in the state sponsors of
terrorism, especially Iran. Paolo Dionisi, Assistant
Diplomatic Advisor to Prime Minister Berlusconi, focused in
particular on the U.S. information (released to the GOI for
the first time in this briefing) that some of the fast boats
were built with reinforced cockpits capable of mounting
weapons. Dionisi said he would investigate whether the new
information would affect the GOI's future approach to the
issue. He said the GOI's initial evaluation of the export of
FB Design fast boats to Iran did not raise any red flags, and
the firm was a legitimate company seeking markets abroad for
a superior product. Dionisi acknowledged the weakness of
Italian law with regard to controlling such exports, though
he said the GOI attempted to be as flexible as the law
allowed, and was willing to halt exports that could hurt
Italian companies if circumstances so warranted. Dionisi
also mentioned the U.S.-Italian defense trade dialogue as a
potential means of pressing Italian companies to cut off
relations with countries of concern.


4. (S) In a separate briefing, MFA Non-proliferation
Coordinator Carlo Tripepi was joined by MFA Office of Persian
Gulf Affairs Director Luigi Maccotta, MPA Director of
Dual-Use Export Licensing Aldo Doria, and MPA
consultant/expert Giulio de Martino, as well as Ecmin and
econoff. Tripepi also confirmed that the GOI had halted the
final boat transfer. (Note - reftel provides details of the
GOI's action to halt the final boat, which consisted of a
formal letter signed by MPA Directors General Amedeo Teti and
Massimo Goti that directed FB Design to halt the final boat

transfer. End note.) Maccotta noted that the Iranian
government had already been pressuring the GOI to rescind its
action and allow the final boat shipment to proceed; he
pointed out that such pressure would not sway the GOI from
its decision to further halt such exports, notwithstanding
the costs to be borne by FB Design.


5. (S) Tripepi said the GOI would continue to seek a
permanent mechanism to control future exports of items that
do not fall clearly under current Italian dual-use
regulations. The interagency dual-use committee was already
considering further measures to deal with such exports.
Tripepi also suggested that such exports might warrant
discussion within the Wassenaar Arrangement (he recalled
Wassenaar Arrangement members becoming involved with a
non-controlled export from Russia to Eritrea several years
ago). Although the GOI realizes that a formal multilateral
approach might have trouble gaining traction, added Tripepi,
it was important that other countries' firms not be able to
move into a market closed to Italian companies.

...And MOD Defends Past Actions
--------------


6. (S) At a briefing for MOD actors (also attended by Embassy
assistant DATT),Italian Defense General Staff Director for
Intelligence and Security Admiral Andrea Campregher and four
staffers (Lucio Lepore, Massimo Poli, Ettore Chirico, and
Luigi Mario di Cesare) focused on past MOD actions related to
the FB Design exports. MOD officials did not dispute the
threat posed by Iranian acquisition efforts, as outlined in
the briefing. However, upon first mention of FB Design,
Admiral Campregher announced that he had "authorized" the
transfer of the company's fast boats to Iran. His staffer
explained that when FB Design initially engaged with Iran on
the potential boat sales, the GOI had reviewed the blueprints
and determined that the boats had solely civilian
applications and therefore did not require an export license.
(Note: It was left unclear whether any agency or agencies
outside MOD reviewed the plans; if the review constituted an
official decision; or when such a review took place. End
note.)


7. (S) Admiral Campregher appeared surprised upon hearing the
information about the strengthened boat cockpits, and claimed
that FB Design would have violated Italian law if this were
true. He inquired as to the source of the information and
requested "evidence" of such modifications that would allow
the GOI to justify in a court of law (if necessary) its hold
on the transfer. Campregher emphasized the importance of the
U.S. sharing such information with the GOI much earlier so
that Italian officials would be made aware of the potential
military application of items that otherwise did not appear
to require a license.


8. (S) Campregher stressed that GOI officials had no
authority to impede a transfer or require a licensing
determination if the item was not on a control list or if the
end-user was not subject to multilateral sanctions. MOD
officials also cited concerns about their personal liability
for damages if a court decided the GOI had blocked a transfer
without legal justification. The Wassenaar Arrangement, the
EU, or another body, they said, should establish a
multilateral standard by which Italy and all member states
would have to abide.


9. (S) MOD further confirmed that the Italian firm Isotta
Fraschini was providing new engines for Iran,s three Parvin
class gunboats, as described in the briefing. As with the FB
Design boats, the MOD said that the engines did not meet
Wassenaar dual-use control standards, and that the GOI had
therefore let the deal proceed. Regarding the briefing,s
mention of the Italian firm Galileo Avionica,s supply of
modern fire control systems for Syrian T-72 tanks, MOD noted
that Rome had approved the sale of what were clearly military

vice dual-use items in the late 1990s.

Comment
--------------


10. (S) The GOI officials attending the briefings all noted
the strict legalistic nature of the existing Italian export
control process, which generally does not provide for the
consideration of broader policy goals in the export license
process. Finding a legal mechanism within that perspective
may prove difficult for the GOI, hampering its ability to
impede other transfers of concern in the future, except
through less orthodox means as was recently done to stop the
final boat export. However, the newly appointed Tripepi, who
recently replaced long-time MFA Non-proliferation Coordinator
Ugo de Mohr, appears to favor a more flexible approach to
controlling the export of sensitive items going to countries
of concern. His MPA counterpart Aldo Doria along with
Doria's boss, DG Teti, have already demonstrated their
commitment to seriously addressing our concerns. Although
they may find challenges in Italian law and possible
resistance from some ministries and industry, the willingness
of these key GOI actors to seek creative solutions to
dual-use transfer issues should help our efforts to convince
the GOI to more tightly control such transfers in the future.


11. (S) Despite examples in the briefing of other European
countries' unilateral actions to stop similar sales,
virtually everyone the U.S. team spoke with expressed concern
that, absent a multilateral approach, any GOI effort to halt
sales would result in Italian economic losses, while similar
deals from firms in other countries would go forward. As we
continue to persuade the GOI to strengthen its domestic
export controls on fast boats or other items that straddle
the dual-use/commercial divide, we may need to emphasize the
difficulties inherent in a multilateral solution, which
likely would require long and difficult negotiations. End
comment.


12. (U) Zarzecki and Cassayre cleared this report.

Visit Rome's Classified Website:
http://www.state.sgov.gov/p/eur/rome/index.cf m

SKODON


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2004ROME01594 - Classification: SECRET