LITHUANIA'S MFA WARY OF PROPOSED ARMS SALE TO NEPAL

C O N F I D E N T I A L VILNIUS 000530

SIPDIS

STATE PASS TO EUR/NB AND EUR/PRA (MCASSAYRE)

E.O. 12958: DECL: 05/22/2015
TAGS: MCAP KSTC PARM PGOV PTER PINR LH NP
SUBJECT: LITHUANIA'S MFA WARY OF PROPOSED ARMS SALE TO NEPAL

REF: G. SHELTON E-MAIL FROM EMBASSY KATHMANDU 5/23/05

Classified By: Political/Economic Officer Alexander Titolo for reasons
1.4 (b) and (d)


1. This is a short-fuse action request; see para 6. We need
input from Washington and Katmandu by OOB May 24.


2. (C) SUMMARY: Kestutis Jankauskas, Director of the MFA'a
Security Policy Department, notified us on May 18 of an
application of a Lithuanian company for a license to export
ammunition-manufacturing equipment to the Government of
Nepal. Jankauskas said the GOL was consulting with us under
the terms of the confidential bilateral agreement our
governments concluded via an exchange of notes in April of
this year, preliminary to Lithuania's membership in the
Wassenaar Arrangement. Jankauskas said that the MFA has
suspicions that the equipment may be diverted to other
recipients, possibly including terrorists, and general
reservations about providing an export license for the sale
of such equipment to Nepal. He bases his suspicions on the
high value of the sale of ostensible "replacements," and his
reservations on the internal civil strife and concern for the
human rights situation in Nepal. Jankauskas suggested that
defense firms may be looking to export arms or related
material from Lithuania because they
believe it will be easier to gain export licenses from the
GOL than from Western European governments. He noted that
the governments of France and Germany have previously denied
export licenses to Nepal for category ML18 items.

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DETAILS OF THE PROPOSED SALE
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3. (C) JSC Manubaltas, a Lithuanian firm the MFA maintains
is a wholly-owned subsidiary of the French company Manurhin
Equipment S.A., proposes to export ammunition-manufacturing
equipment, which the MFA believes falls into category ML18 of
the national common military list. (Post was not able to
confirm the link between Manubaltas and Manurhin. Manubaltas
has no active telephone number or website. Its address is
listed as Zirmunu street 68, Vilnius. Jankauskas said the
company has "stock" valued at about USD 6,000.) Jankauskas
estimated the value of the contract at EUR15 million.


4. (C) The official buyer of the equipment is the Ministry
of Defense of Nepal; the official end-user the Sundarijal
Defense Factory. The Directorate of Defense Production,
Royal Nepalese Army, Sundarijal Defense Factory,
Sundarijal-Kathmandu Nepal sealed the end-user certificate
under the signature of Brigadier General S. D. Shah, Director
of Defense Production of the Royal Nepalese Army, January 14,

2005. The Nepalese Charge d'Affaires in Moscow (name
illegible) authenticated the seal and signature on March 21.


5. (C) The GOL's interagency export control board will
review the license request on May 24. Because of the high
value of the sale, Jankauskas expects significant interest on
the part of some board members to approve the license
application, and he wants to be able to make a strong,
informed argument on the merits -- for or against. He
requested that the USG provide any information available on
the following issues by May 24 to assist the board's decision
making process:

-- bona fides of Sundarijal Military Factory,

-- possibility of diversion in transit,

-- verification of the Ministry of Defense's need for the
equipment, and

-- record of Manurhin Equipment S.A. supplying products to
unstable states.


6. (C) COMMENT AND ACTION REQUEST: This request demonstrates
Lithuania's serious commitment to non-proliferation and
recognition of the importance of our bilateral cooperation.
We request Department and other addressees provide any
information releasable to the GOL that will complement their
efforts. We appreciate Embassy Kathmandu's quick response
and input (ref e-mail) on the issues of Sundarijal's bona
fides, possibility of diversion in transit, and the Defense
Ministry's need for this equipment. We call attention to the
short fuse to respond to the MFA before the May 24 meeting.
Kelly