(S) GOI TO INVESTIGATE EXPORT OF MACHINE TOOL TO

S E C R E T ROME 000683 SIPDIS DEPARTMENT FOR ISN/MTR APRIL JONES DEPARTMENT FOR ISN/MTR, EUR/PRA, AND EUR/WE E.O. 12958: DECL: 06/01/2033 TAGS: PARM MTCRE PREL IT IR SUBJECT: (S) GOI TO INVESTIGATE EXPORT OF MACHINE TOOL TO IRAN REF: A. STATE 55497 ¶B. ROME 197 Classified By: Econ Counselor William Meara for reasons 1.4 (b),(c) an d (d) ¶1. (U) This is an action request. Please see paragraph 5. ¶2. (S) On May 29, Econoff delivered to Roberto Liotto, the Italian MFA official responsible for Italian participation in the Wassenaar Arrangement (WA) and Nuclear Suppliers Group (NSG) Ref A non-paper on the export of an Italian computer numerical controlled (CNC) processing machine (machine tool) to Iran. Liotto said the GOI was unaware that CMS Industries had exported a 5-axis machine tool to Iran via Art Makina, a Turkey-based intermediary, and said the GOI would investigate the export. Liotto acknowledged the GOI may have granted a license for the machine tool's export to Turkey, but noted the GOI would not have granted the license had it known the machine tool's final destination was Iran. ¶3. (S) Liotto said he will share Ref A information with the GOI interagency committee responsible for export control policy and that the GOI will investigate the machine tool's export to determine the type of export license that was issued and the information included in the export license application. Liotto said CMS Industries could face criminal penalties if the GOI is able to prove the company deliberately mislead Italian export licensing authorities. ¶4. (S) On the general subject of export licensing, Liotto reiterated his earlier assertion (Ref B) that the GOI is closely scrutinizing exports to the Persian Gulf region. The GOI has begun imposing conditions on export licenses for sensitive goods going to the Gulf Region, including post-delivery end use verification by the exporting company. Export licenses for "exceptionally" sensitive goods going to the Gulf may include provisions for post-shipment verification by the Italian Embassy, something which Liotto noted is facilitated by the GOI's "excellent relations with countries in the region." All exports of "sensitive goods," including those in the NSG's dual-use annex, are automatically referred to the GOI interagency committee responsible for export controls. This committee is headed by the Ministry of Foreign Trade, and includes the Ministry of Foreign Affairs, Ministry of Defense, and representatives from the intelligence community. Liotto noted that EU and Italian export control regulations prohibit the export of NSG-listed items to Iran, and that the interagency committee would not have approved a license application for the export of a CNC processing machine to Iran. ¶5. (S) Comment and action request. Our previous experience has shown the GOI is sometimes unable to stop the export to Iran of dual-use goods that are not clearly controlled by one of the multilateral export control regimes. Because the machine tool in question is clearly controlled by the Wassenaar Arrangement and the Nuclear Suppliers Group, this case provides an excellent opportunity for the GOI to prove its bona fides as a partner in our global non-proliferation efforts. We also intend to use this case a part of our effort to secure greater cooperation from the new GOI on Iran sanctions and non-proliferation issues. Post requests Department provide any additional information that may aid the GOI in its investigation of this export, including shipment dates. End comment and action requested. SPOGLI