IRANIAN FAST BOATS

S E C R E T ROME 001591

SIPDIS


STATE FOR EUR/WE, EUR/PRA, INR/SPM, NP/ECNP

E.O. 12958: DECL: 05/09/2015
TAGS: ETTC PARM IT IR EXPORT CONTROLS
SUBJECT: IRANIAN FAST BOATS

REF: A. SECSTATE 56208


B. 04 ROME 2964 AND PREVIOUS

Classified By: Economic Minister-Counselor Scott Kilner for Reasons 1.4
(b),(c),and (d)


1. (S) Summary. In response to Ref. A demarche, Italy's
Export Control Coordinator Carol Tripepi assured us that the
GOI will continue to block the export of FB Design's last
fast boat under its contract with Iran, and that he was
unaware of any ongoing business between the company and
Iranian entities. Tripepi also stated that the GOI had
recently turned down a license request by Isotta Fraschini
for the export of non-magnetic engines to Iran. More
problematically, Tripepi greeted with skepticism our concerns
over indigenous Iranian fast boat production capabilities; he
would not agree to discuss the matter with FB Design and
suggested that further details be passed through intelligence
channels. Finally, Tripepi insisted that further discussion
of broadening controls (including more flexible Italian
controls) on fast boats and other potential dual-use items
should be conducted in multilateral fora. Embassy will also
be discussing our demarche with the Ministry of Productive
Activities and the Ministry of Defense, and will report their
reactions. End summary.


2. (SBU) Ecmin and econoff discussed Ref. A demarche for one
hour on May 4 with Carlo Tripepi, MFA Non-Proliferation
Coordinator (as well as Director of the MFA,s Arms Material
Authorization Unit, which licenses Italian munitions
exports). Tripepi was accompanied by Carlo Formosa, Office of
the Director General for the Middle East and the
Mediterranean; Bruno Campria, Office of Persian Gulf Affairs;
and Carmelo Barbarello, Non-Proliferation Coordinator's
Office.


3. (S) In presenting the demarche, Ecmin noted our continued
appreciation for Italy's blocking of FB Design's last fast
boat under its contract with Iran. He expressed strong U.S.
concern, however, that Iran's Joolaee Marine Industries (JMI)
was now serial-producing hulls for such boats in Iran using
the prototypes supplied earlier by FB Design. Ecmin further
stressed our concern about any technical assistance that FB
Design or the engine manufacturer Isotta Fraschini might be
providing Iran. The U.S. continued to urge Italy to find the
means to permanently implement more flexible controls for
sensitive exports to Iran that did not clearly fall under a
multilateral regime, as other European countries have managed
to do. We also delivered the additional paper detailing
fifteen incidents last fall involving Iran's threatening use
of patrol boats in the Persian Gulf, presenting it as an
illustration of Iran's continued provocative behavior.


4. (S) In responding, Tripepi first reconfirmed that the GOI
would continue to prevent delivery of the final FB Design
patrol boat to Iran. He also said that he had no evidence of
continuing FB Design business involvement with Iranian
entities. However, Tripepi forcefully reiterated assertions,
which he has made to us in the past, that flexible controls
on exports like patrol boats need to be addressed in a
multilateral context. Such a discussion had begun within the
Wassenaar Arrangement, he said, and that is where it should
remain.


5. (S) The fundamental problem, Tripepi continued, was that
fast boats were readily available in many other countries
that did not impose any form of export controls. Even FB
Design boats theoretically could be shipped today to a third
country, and then onward to Iran, with the GOI unaware of
such transshipment and thus unable to prevent the export.
Tripepi flatly rejected our contention that several European
countries had successfully controlled the export of items
like patrol boats. All EU members applied essentially the
same export control regime, with the partial exception of the
U.K., he stated.


6. (S) Tripepi said he was unaware of any licensing
arrangements that would legally permit Iranian domestic
production of boats based on FB Design prototypes, although
he could not guarantee that a license had not been granted.
When pressed, he resisted the suggestion of approaching FB
Design regarding any past transfers of technology because
such transfers a) would have been legal at the time and b)
could not now be reversed in any case. Asked whether FB
Design (and the GOI) would not be concerned if Iranian
companies had "pirated" advanced fast boat designs, Tripepi

countered that this would be a commercial dispute, which the
company should pursue through international dispute
resolution mechanisms.


7. (S) Tripepi also questioned the specificity of our
information regarding Iranian domestic production. While
conceding that Iran may well be producing "generic" fast
boats, he asked how the U.S. "really knew" the boats were
being produced according to advanced FB Design
specifications. Tripepi was skeptical that, even with FB
Design prototypes, Iran would be able to manufacture patrol
boats of the same quality as those produced in Italy,
especially given Iran's lack of easy access to the advanced
construction materials used to fabricate such boats in Italy.
Tripepi suggested that exchange of more detailed information
through intelligence channels would enable the GOI to better
evaluate whether there would be any value in another approach
to FB Design.


8. (S) In response to Ecmin,s query on whether Isotta
Fraschini was supplying engines or services to Iran, Tripepi
noted that the GOI had denied a license for the firm to
export eight "amagnetic" (presumably meaning non-magnetic)
engines to Iran. Such engines, he added, had military
characteristics that required a munitions, rather than a
dual-use, license. Tripepi claimed not to know whether
Isotta Fraschini was still in contact with Iran regarding
ongoing or future commercial transactions.


9. (S) Comment: We interpret Tripepi's argumentation as an
effort to draw some clear lines with respect to what the
Italian government (or at least the MFA) will, and will not,
do regarding future cooperation on fast boats and related
U.S. systemic concerns over Italy's export control regime.
The GOI will: 1) continue to hold the line on blocking the
last delivery of the last FB Design boat; 2) continue to
carefully scrutinize license applications to Iranian
end-users, blocking those items which are on multilateral
control lists (like the non-magnetic engines); 3) discuss
broadening dual-use controls in multilateral fora. What the
GOI will strongly resist is: 1) requests for unilateral
changes to Italian export control laws and practices, outside
of a multilateral framework; 2) requests to block Italian
export, even to states of concern, of items that are not
subject to multilateral controls; 3) requests to investigate
Italian companies absent strong evidence of a violation of
agreed multilateral export control regulations.


10. (S) Comment (cont.): While perhaps presented more
forcefully on this occasion, Tripepi's positions are
consistent with MFA views throughout the course of our
long-running disputes with Italy over fast boats. What
progress we have made on the issue (blocking the last of 12
boats),was accomplished on the initiative of the Ministry of
Productive Activities (to which we will next present our
demarche) without apparent assistance from the Foreign
Ministry. End Comment.

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2005ROME01591 - Classification: SECRET