FASTBOATS REVISITED: ITALIAN FIRM'S SHIPMENT OF

1. (U) This is an action request. See paragraph 6.



2. (S) Summary. Embassy delivered Ref A demarche,
regarding the export of marine diesel engines to Iran, to
officials at the Italian Ministries of Foreign Affairs (MFA)
and Foreign Trade (MFT). Both officials expressed surprise
that the exports had taken place, questioned whether the
engines are included in Munitions List 9 of the Wassenaar
Arrangement, and said they would follow-up with the exporter
and other GOI agencies to get to the bottom of the matter.
End summary.



3. (S) On November 3, EconCouns delivered Ref A demarche to
Carlo Tripepi, the MFA Office Director responsible for
Italian Munitions Exports (and former Director of the Office
that oversees Italian participation in the Wassenaar
Arrangement). EconCouns noted the Embassy has raised
repeatedly over past four years our concerns regarding
Italian exports of fastboats and their component parts to
Iran and that our concerns regarding the export of marine
diesel engines to Iran are very similar to our concerns
regarding the earlier export of Italian-manufactured
fastboats. Tripepi expressed surprise that the Isotta
Fraschini Motori Company had gone forward with the export,
"They are a sophisticated company and know Iran is a
sensitive destination," and noted MFA Director General for
Multilateral Economic Affairs had asked Isotta Fraschini not
to pursue exports to Iran.



4. (S) Tripepi took issue with our assertion that the
engines in question are covered by Munitions List 9 of the
Wassenaar Arrangement, and said the engines could be exported
to Iran without a GOI export license because they are not
covered by the Wassenaar Arrangement. (Note: This is
virtually identical to the GOI response to USG efforts to
halt the export of fastboats to Iran. End note.) WiQut
the legal coverage of the Wassenaar Arrangement Tripepi said
the GOI "is obliged to invent new procedures" outside of
normal legal channels to stop exports of dual-use goods.
Tripepi observed that in the wake of the fastboats' export,
the GOI asked the USG to have fastboats and their components
added to the Wassenaar Arrangement's Munitions List, and that
it is possible the boats and engines were added without the
GOI's knowledge. He said he would double-check the Wassenaar
Arrangement Munitions Lists and, if he found the engines are
included, would refer the export to the Ministry of Justice.



5. (S) In a November 7 meeting with EcMin, Amadeo Teti, MFT
Director General for Commercial Agreements echoed Tripepi's
assertions that the engines are not covered by the Wassenaar
Arrangement and can be exported legally without an export
license. Teti agreed with EcMin's assertion that now is not
the time for business as usual with Iran, but observed that
if the engines are not covered by the Wassenaar Arrangement,
the GOI does not have the legal authority to stop their
export. Teti said he would look into the matter and share
with the Embassy any information he finds, including
technical specifications of the engines.



6. (S) Comment and action request: Both Tripepi and Teti
are valued interlocutors who have previously shown
willingness to cooperate with the USG on export control
issues. In the case of the fastboats, Teti noted the final
shipment was stopped when the GOI purchased the last boat for
use by the Guardia di Finanza, part of the Italian armed
forces. The export of marine engines to Iran highlights the
need for closer coordination between the USG and GOI on
export control issues. Post notes that the regular biennial
export control consultations between Italy and the United
States have not been held since 2004 (reported Ref B) and
welcomes Department views on holding USG-GOI consultations in
the spring. End comment and action requested.
SPOGLI