US embassy cable - 04ROME1591

S E C R E T ROME 001591 
 
SIPDIS 
 
 
FOR NP/CBM 
 
E.O. 12958: DECL: 04/19/2014 
TAGS: ETTC, PARM, PREL, TW, KN, IT, AS, TH, CBW 
SUBJECT: TAIWAN/DPRK CHEMICAL SEIZURE - ITALY SEEKING 
INCREASED RESOURCES TO AUGMENT ITS EXPORT CONTROLS 
 
REF: STATE 48132 
 
CLASSIFIED BY: ECONOMIC MINISTER-COUNSELOR SCOTT KILNER FOR REASONS 1.4 
(B, D, AND H) 
 
1. (S) ECONOFF RAISED REFTEL POINTS WITH MFA 
NON-PROLIFERATION COORDINATOR CARLO TRIPEPI ON MARCH 8.  (WE 
ALSO LEFT THE POINTS AT MFA WITH DEPUTY DIRECTOR FOR 
POLITICAL AFFAIRS CLAUDIO BISOGNIERO, DISARMAMENT OFFICE 
DIRECTOR GIOVANNI IANNUZZI, AND EAST ASIA OFFICE DIRECTOR 
CRISTINA RAVAGLIA.) THE RECENTLY APPOINTED TRIPEPI TOLD US HE 
WAS UNAWARE OF THE CASE, BUT PROMISED TO LOOK INTO IT, ADDING 
THAT THAT HE PLANNED TO DISCUSS OUR INQUIRY WITH MINISTRY OF 
PRODUCTIVE ACTIVITIES (MPA) EXPORT LICENSING OFFICE DIRECTOR 
ALDO DORIA. 
 
2. (S) DORIA INVITED ECONOFF TO A MEETING ON APRIL 16 TO 
PROVIDE A DETAILED RESPONSE TO OUR INQUIRY. DORIA CONFIRMED 
THE MPA'S APPROVAL OF AN EXPORT LICENSE IN MID-2003 FOR THE 
SHIPMENT, FOLLOWING CONSIDERATION OF THE ITALIAN FIRM 
ITALMATCH'S APPLICATION BY THE GOI INTERAGENCY "CONSULTATIVE 
COMMITTEE ON DUAL-USE GOODS EXPORTS" (WHICH WAS THEN LED BY 
TRIPEPI'S PREDECESSOR UGO DE MOHR; DORIA IS THE COMMITTEE'S 
VICE CHAIR).  DORIA SAID NONE OF THE COMMITTEE'S MEMBERS, 
INCLUDING THOSE FROM MOD AND THE INTELLIGENCE SERVICES, HAD 
RAISED ANY CONCERNS ABOUT THE SHIPMENT.  ITALMATCH HAD 
PREVIOUSLY BEEN AUTHORIZED EXPORT LICENSES AND HAD AN 
UNTARNISHED RECORD WITH THE GOI.  DORIA ACKNOWLEDGED THAT THE 
END-USER, THE THAI FIRM DAEBANG CO. LTD. OF BANGKOK, WAS 
PREVIOUSLY UNKNOWN TO THE GOI. THE GOI HAD CONTACTED DAEBANG 
WHILE THE APPLICATION WAS IN TRAIN AND CONFIRMED ITS PURCHASE 
OF THE CHEMICALS, ADDED DORIA. 
 
3. (S) THE MPA CONTINUES TO BE IN TOUCH WITH ITALMATCH 
REGARDING THE COMPANY'S POSSIBLE AGREEMENT TO TAKE BACK THE 
DIVERTED CHEMICAL SHIPMENT, ACCORDING TO DORIA.  HE NOTED 
THAT THE COMPANY IS ESPECIALLY CONCERNED ABOUT LEGAL 
LIABILITY ISSUES, AS WELL AS PRESERVING THE COMPANY'S ABILITY 
TO QUALIFY FOR FUTURE EXPORT LICENSES. DORIA ADDED THAT ANY 
RETURN OF THE CHEMICALS TO ITALY WOULD HAVE TO BE FUNDED BY 
THE COMPANY -- THE GOI WAS NOT ABLE OR WILLING TO PAY.  THE 
GOI WAS HOPING FOR PROGRESS TOWARDS A SOLUTION AT A MEETING 
WITH ITALMATCH BEFORE THE END OF APRIL. 
 
4. (S) DORIA SAID THIS CASE EXEMPLIFIED THE DIFFICULTIES 
INHERENT IN SHIPMENTS TO NON-AG COUNTRIES LIKE THAILAND, 
WHICH HE NOTED DID NOT HAVE A NATIONAL AUTHORITY THAT COULD 
ISSUE END-USER CERTIFICATES. ITALIAN EXPORT LICENSE 
APPLICANTS ARE TYPICALLY SMALL- AND MEDIUM-SIZED COMPANIES 
THAT ARE HEAVILY DEPENDENT ON EXPORT MARKETS, MANY OF THEM IN 
ASIA. THE GOI WAS RELUCTANT TO IMPEDE SUCH EXPORTS ABSENT ANY 
DEROGATORY INFORMATION REGARDING THE ITALIAN EXPORTER OR THE 
FOREIGN END-USER. 
 
5. (S) DORIA WAS HOPEFUL THAT GOI EXPORT CONTROL AUTHORITIES 
WOULD SOON BE GIVEN THE FINANCIAL RESOURCES TO PERFORM THEIR 
OWN END-USER INVESTIGATIONS, WHICH COULD HELP PREVENT SIMILAR 
RE-EXPORT ATTEMPTS IN THE FUTURE. HE NOTED THAT HIGH-LEVEL 
POLITICAL PRESSURE FROM MINISTERS FRATTINI (MFA) AND MARZANO 
(MPA) WOULD LIKELY RESULT IN THE APPROPRIATION OF FUNDS TO 
ALLOW THE GOI TO INITIATE SOME LIMITED POST-SHIPMENT 
CONTROLS.  DORIA WAS OPTIMISTIC THAT INITIATING EVEN LIMITED 
CHECKS WOULD GIVE ITALIAN FIRMS AN INCREASED INCENTIVE TO 
CHOOSE END-USERS MORE JUDICIOUSLY WHEN EXPORTING SENSITIVE 
ITEMS REQUIRING EXPORT LICENSES. 
 
6. (S) COMMENT. THE GOI'S INTENTION TO DIRECT ADDITIONAL 
RESOURCES TO POST-SHIPMENT CHECKS OF SENSITIVE EXPORTS IS 
WELCOME NEWS, ALTHOUGH APPARENTLY NOT A COMPLETELY DONE DEAL. 
EMBASSY WILL ENCOURAGE OUR GOI EXPORT CONTROL CONTACTS TO 
CONTINUE THEIR EFFORTS TO OBTAIN SUCH RESOURCES. WE ALSO 
BELIEVE THIS WOULD BE A GOOD TOPIC TO DISCUSS AT THE UPCOMING 
ROUND OF BILATERAL DUAL-USE EXPORT CONTROL DISCUSSIONS. END 
COMMENT. 
 
VISIT ROME'S CLASSIFIED WEBSITE: 
HTTP://WWW.STATE.SGOV.GOV/P/EUR/ROME/INDEX.CF M 
 
SKODON 
 
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2004ROME01591 - Classification: SECRET