U.S.-SINGAPORE COUNTERPROLIFERATION DIALOGUE

S E C R E T SINGAPORE 001131

SIPDIS

SIPDIS

STATE FOR EAP/MTS
ISN FOR PDAS MCNERNEY

E.O. 12958: DECL: 06/12/2017
TAGS: PARM MNUC KNNP ETTC ETRD KTFN PREL SN
SUBJECT: U.S.-SINGAPORE COUNTERPROLIFERATION DIALOGUE
SCENESETTER

REF: A. 05 SINGAPORE 3160

B. 06 SINGAPORE 2854

C. 06 SINGAPORE 1615

D. 06 SINGAPORE 1578

E. SINGAPORE 703

F. 04 SINGAPORE 748

G. SINGAPORE 227

H. SINGAPORE 852

Classified By: E/P Chief Ike Reed for reasons 1.4(b),(c),and (d)


1. (S) Summary: The second U.S.-Singapore
Counterproliferation (CP) Dialogue in Washington June 14
offers an opportunity to review our steadily expanding
bilateral CP cooperation and encourage Singapore to further
strengthen its export control regime )- in particular
through monitoring of transshipments and goods passing
through its free-trade zone. In post's assessment,
Singapore's own security concerns are increasing its
willingness to be proactive on CP issues -- including through
interdiction of suspect shipments. However, the GOS remains
anxious about legal and financial liabilities as well as the
commercial impact in any case that is not clearly subject to
UN Security Council sanctions. Reassurance that the USG will
refer to Singapore only serious and well-substantiated cases,
provide it with sufficient evidence, and press other
countries to stop shipments at their source would do much to
ensure that Singapore remains responsive to our interdiction
requests. End summary.

Substantial Progress
--------------


2. (S) Singapore has significantly increased its cooperation
on CP issues since the initial round of the CP Dialogue took
place here in October 2005 (ref A).

Key examples include:

-- Proliferation Security Initiative (PSI). Singapore
continues to be active in PSI. Singapore Customs and the
Ministry of Defense co-hosted a successful PSI-related
Operational Experts Group (OEG) meeting in July 2006 focused
on the legal aspects of maritime interdictions.

-- Strategic Goods Control List. The GOS announced in
September 2006 plans to expand its strategic goods control
list to include all the items identified under the four major
international control regimes -- the Missile Technology
Control Regime, the Nuclear Suppliers Group, the
Australia Group, and the Wassenaar Arrangement (ref B).

-- Training. The GOS is an enthusiastic consumer of EXBS
training and invariably puts it to good use to improve its
technical and enforcement expertise. USG training provided
thus far has covered commodity identification, targeting and
risk management, investigative techniques, pre-license
checks/post shipment verification, seaport interdiction, and
interview and interrogation methods for export
investigations. By January 1, 2008, when Singapore's
expanded strategic goods control list is set to take effect,
EXBS will have provided all of the specific
training Singapore requested at the last CP dialogue, as well
as workshops on the Wassenaar Arrangement and WMD
interdiction.

-- WMD Finance and Countering the Financing of Terrorism
(CFT). Singapore amended its "Schedule of Serious Offenses"
to include all major crimes covered by the Strategic Goods
(Control) Act (SGCA) in May 2006. The Schedule serves as a
list of predicate offenses for Singapore's Corruption, Drug
Trafficking, and Other Serious Crimes (Confiscation and
Benefits) Act (CDSA) of 1999, and allows for seizure of all
proceeds from these crimes, regardless of whether they were
committed in Singapore or overseas (ref C). Singapore also
amended the CDSA to include offenses related to CFT and money
laundering (ref D). In December 2006, the Monetary Authority
of Singapore issued new and revised anti-money laundering
(AML) and CFT regulations for banks and other financial
institutions that for the first time include CFT provisions
in accordance with Financial Action Task Force (FATF)
recommendations. Affected institutions include banks,
finance companies, money changers and remitters, life

insurers, capital market intermediaries, and financial
advisers (ref E). The GOS has been extremely cooperative in
the areas of UNSCR terrorist finance designations and DPRK
financial activity in Singapore.


3. (S) While the GOS has made substantial progress, it would
be fruitful for the USG to enagage the GOS in a discussion of
outstanding issues. For example, an exception to the new
strategic goods regulation states that transshipment and
transit cargo remaining in Singapore's Free Trade Zones for
21 days or less (air, land, or rail) or 45 days of less (sea)
will not require permits. This carve-out could potentially
represent a large percentage of goods passing through
Singapore's legal jurisdiction. Also, the announced
Strategic Goods Control Act expansion represents an enormous
resource challenge for the GOS. We will need to ensure that
the GOS devotes sufficient resources to effectively implement
the new laws, and we should be prepared to provide technical
assistance as needed. Finally, we remain concerned that
Singapore does not collect manifest data on transshipment or
transit cargo unless it is bound for the United States, e.g.,
under the Container Security Initiative.

Interdictions
--------------


4. (S) Singapore's geography and position as a leading
container port and transportation hub make it a natural
chokepoint through which pass suspect and potentially
sanctionable shipments involving the DPRK, Burma and Iran, in
addition a huge volume of legitimate trade. At USG request,
the GOS has interdicted or helped monitor a number of
shipments of concern transiting Singapore in recent months.
In several of these cases, the chronically understaffed MFA
office that deals with CP issues has responded to our urgent
requests by pulling together interagency meetings at night or
on weekends to take action against shipments on the basis of
little more than our assurance that they were of
proliferation concern or might be covered under UN sanctions.
These actions represent a significant departure from the
GOS' historical reluctance to take actions that might
adversely affect the operations of its highly efficient and
busy port, the basis of Singapore's prosperity. This
increased willingness to act appears to reflect both
Singapore's own concerns about proliferation and its desire
to cooperate closely with the United States on security
issues.


5. (S) Nevertheless, the GOS remains anxious about both the
potentially negative commercial impact of these actions and
legal and financial liability for seizing goods that are not
specifically covered by UN sanctions or considered to be
"dual use" items. Although the GOS has acted almost
immediately in most cases, we have not always been able to
provide it with evidence to fully substantiate the concerns
that led to the initial request due to our need to protect
sources. MFA occasionally reminds us of its seizure based on
British intelligence of two Iran-bound graphite shipments in
2003 (ref F). Despite numerous requests, neither the United
States nor the United Kingdom could provide assistance in
building a legal case for the seizure, and the graphite was
returned to the Chinese suppliers two years after the initial
action.


6. (S) MFA has told us informally that some GOS officials
questioned the USG's linking what later turned out to be a
non-controlled item to UNSCR 1718 (ref G). Some reportedly
wondered whether the USG had "taken advantage of how
seriously Singapore viewed its international obligations in
order to spur the GOS into action." The GOS frequently asks
whether the USG is putting pressure on source countries,
suggesting we should try to stop shipments at the ports of
origin rather than rely on transit and transshipment ports to
intercept cargo. While the GOS has continued to act swiftly
on our requests (the most recent resulting in the seizure of
a shipment of sodium perchlorate) (ref H),perceived failures
on our part to provide the GOS with information it sees as
essential to justify its actions could undermine over time
its willingness to lean forward on our requests, with
potentially serious consequences.


7. (S) In order to ensure the GOS remains responsive to our
short-fused requests, we believe it would be useful to:


-- Acknowledge that our urgent requests have imposed a heavy
operational load;

-- reassure the GOS that we will prioritize only the most
serious cases for referral to Singapore, and will endeavor to
provide the best information possible;

-- discuss frankly the constraints that sometimes limit the
information we provide, and explain how cases are vetted to
ensure our concerns are valid; and,

-- discuss other steps we are taking to disrupt suspect
shipments, including interventions with source countries.
HERBOLD