US embassy cable - 04ROME776

S E C R E T  ROME 000776 
 
SIPDIS 
 
 
NOFORN 
 
STATE FOR EUR/WE, EUR/PRA, NP/ECNP, INR/SPM, NEA/NGA, 
PM/RSAT, PM/DTCP 
 
E.O. 12958: DECL: 03/01/2014 
TAGS: ETTC, EIND, PARM, PREL, IT, IR, EXPORT CONTROLS 
SUBJECT: ITALIAN MINISTRY TRIES TO BLOCK FUTURE FAST BOAT 
BUSINESS WITH IRAN 
 
REF: ROME 254 AND PREVIOUS 
 
Classified By: Economic Minister-Counselor Scott Kilner for reasons 1.5 
 (a) and (b) and 1.6 x6 
 
1. (S)  SUMMARY:  With FB Design's fast-boat contract with 
Iran effectively fulfilled, the Italian Ministry of 
Productive Activities has sent a stern letter to the company, 
warning it to do no further business with Iran without formal 
ministerial review.  The legal force of the letter is 
unclear, but it represents the first formal action the GOI 
has taken to rein in FB Design's sales to Iran.  END SUMMARY. 
 
 
2. (S)  On February 27, Gabrielle Checchia, Diplomatic 
Advisor to Minister of Productive Activities (MPA - i.e., 
Industry and Foreign Trade) Marzano, met with Ecmin to 
explain the latest steps the MPA has taken to address the 
long-festering problem of fast-boat sales to Iran by the 
Italian company Fabio Buzzi Design. 
 
3.  (S)  According to Checchia, on February 26 two MPA 
Directors General (Massimo Goti, DG for Productive 
Development and Competitiveness, and Amadeo Teti, DG for 
Commercial Agreements-Foreign Trade) co-signed and sent to FB 
Design an official letter prohibiting the company from 
exporting any additional high-speed boats to Iran. The letter 
reportedly covers 12 different RIB and FIB fast boat models, 
and -- importantly -- also explicitly prohibits the company 
from providing technical assistance and components. 
 
4. (S)  In addition, Checchia stated that the letter tells FB 
Design that it must submit all/all proposed future exports to 
Iran to the MPA for Ministry review.  This review, he added, 
would consider not only specific elements of the contract 
(end-user, level of technology, etc.), but also the political 
context of the sale. 
 
5. (S)  Finally, Checchia stated that the letter pointedly 
notes that a copy is being sent to Italian customs 
authorities, which are being instructed to report to the MPA 
any FB Design exports to Iran which come to their attention. 
 
6. (S)  In response to Ecmin's question regarding the legal 
force of the MPA letter, Checchia admitted that it falls 
short of a formal decree-law.  While a decree-law had been 
considered earlier (reftels), Checchia said the Ministry had 
concluded that it would take too long to push through and 
might not be possible at all.  Nevertheless, Checchia 
insisted vigorously that the instructions in the letter fall 
fully within the competence of the co-signing directors 
general and that the letter carries considerable weight. 
"The company would be foolish to disregard it...They know 
there would be consequences," Checchia stated. 
 
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COMMENT 
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7. (S)  Embassy has no reason to doubt that Checchia has 
provided a full and accurate description of the contents of 
the MPA letter.  Less clear, however, is how much leverage 
the document would really give the MPA to move against FB 
Design, should the company continue to flout government 
pressure, as it has in the past.  In this connection, we note 
that the letter does not appear to represent a fully 
coordinated GOI approach; Checchia stated only that the MFA 
had been sent a copy.  Nevertheless, the MPA letter 
represents the first formal action of any kind that the GOI 
has taken against FB Design in the roughly two years we have 
been arguing over this issue. 
 
8. (S)  It is no accident, in our view, that the MPA has 
waited to take this step until FB Design's existing contract 
with Iran has effectively been fulfilled;  moving against the 
company to disrupt that contract, in the end, proved to be an 
 
 
action that was too hard politically, and too tenuous 
legally, for the GOI to take.  However, now that FB Design 
has fulfilled its contractual obligations, it does appear 
that the MPA is making a concerted attempt to draw a red line 
in front of FB Design, effectively telling the company: "We 
let you complete your contract with Iran so you wouldn't 
suffer any losses.  But that's it -- no more."  We must now 
watch closely to see how FB Design reacts. 
SEMBLER 
 
 
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 2004ROME00776 - Classification: SECRET