US embassy cable - 04ROME2322

S E C R E T  ROME 002322 
 
SIPDIS 
 
 
STATE FOR EUR/WE, EUR/PRA, NP/ECNP, PM/DTCP, PM/RSAT, 
INR/SPM 
 
E.O. 12958: DECL: 06/15/2014 
TAGS: ETTC, EIND, PARM, PREL, IT, IR, EXPORT CONTROLS 
SUBJECT: U.S.-ITALY EXPORT CONTROL TALKS: EMBASSY THOUGHTS 
ON THE AGENDA 
 
REF: A. ROME 1928 
 
     B. ROME 1594 
     C. ROME 776 
     D. 03 ROME 3842 
 
Classified By: DCM Emil Skodon for reasons 1.5 (a) (b) and (d) 
 
1. (S) Summary. The June 23 U.S.-Italy export control talks 
in Rome provide an important opportunity to encourage the GOI 
to address more flexibly the control of troublesome exports 
that do not fall clearly under any multilateral regime, such 
as the export of Italian fast boats to Iran. The GOI long 
claimed it was legally constrained from halting such exports, 
but recently has discovered some creative flexibility.  This 
more constructive approach appears tenuous, however, and 
backsliding remains a strong possibility.  Embassy recommends 
that the U.S. delegation take advantage of the talks to 
engage the GOI in a frank discussion of our continued 
concerns, pressing for greater clarity on how the GOI can 
address gray area exports to regions of concern.  Our 
bilateral discussions will also include an update from Alenia 
Spazio on its most recent interest in pursuing projects with 
China.  The talks also will enable us to gauge GOI interest 
in pursuing a bilateral agreement on remote sensing, as 
discussed during last year's talks (ref D). We understand 
Washington is also interested in raising the Joint Strike 
Fighter program, as well as the EU China arms embargo, though 
the expected composition of the GOI delegation may inhibit 
any in-depth discussion of either topic. End summary. 
 
Sensitive Exports to Iran - Seizing the Opportunity 
--------------------------------------------- ------ 
 
2. (S) Embassy believes the U.S. delegation should strongly 
encourage GOI implementation of a permanent, flexible 
approach to controlling problematic exports that do not fall 
clearly under a multilateral control regime. Regarding FB 
Design's contract to export fast boats and related equipment 
to Iran, the Italians found an ad hoc way to block the last 
of 12 boat deliveries late in the game (ref C), although 
there is some question whether even that measure remains 
fully in effect. It is not at all certain that the GOI has 
found a long-term solution to the problems caused by such 
worrisome dual use exports, and we may face similar 
difficulty the next time a "gray area" export to a state of 
concern arises.  We thus recommend that the U.S. delegation 
lay out our continued concerns directly in the course of our 
upcoming discussions. 
 
3. (S) We believe MFA nonproliferation coordinator Carlo 
Tripepi would be more open than his predecessor (Ugo de Mohr) 
towards a more flexible interpretation of Italian export 
control laws and regulations.  (It could prove helpful that 
Tripepi assumed his position subsequent to the fast boats 
exports to Iran - the most recent GOI efforts to curtail 
these exports apparently did not involve the MFA). However, 
in raising this issue with Tripepi and his colleagues on the 
GOI interagency Consultative Committee on Dual-Use Goods 
Exports, we need to make clear exactly what we want the GOI 
to do. The Italians say they have developed an export control 
system that is fully consistent with EU norms and practices, 
and fully abides by all the multilateral control regimes. 
Tripepi also told us during the recent INR briefing on fast 
boats (ref B) that the GOI interagency dual-use committee was 
considering a permanent mechanism to control future exports 
of items that do not fall clearly under current Italian 
dual-use regulations. The U.S. delegation should encourage 
those efforts, and try to get the GOI to be more specific. 
 
4. (S) One potentially fruitful approach would be to 
underscore the methods by which other EU member states more 
effectively control certain dual-use exports, including items 
 
 
that do not fall under a multilateral regime. This approach 
was used to some extent in the course of the recent INR 
briefing, and our interlocutors seemed receptive to following 
examples already set by some of their EU partners. 
 
5. (S) Embassy also recommends that Washington experts 
continue development of a matrix of the Italian export 
control system.  In the course of "Globalization/Declaration 
of Principles" talks in Italy in January 2004, officials from 
PM/DTC, PM/RSAT, and NP/ECNP all participated in an "Export 
Control Working Group" which focused on creating such a 
matrix -- the first systematic attempt to analyze Italian 
controls thoroughly that we've ever seen.  Such a matrix 
might provide the analytic framework for talking to the 
Italians about improving their system, and could be the 
starting point for a constructive discussion with the GOI of 
lessons learned from the fast boats case. Failing to take 
such a systemic approach -- starting with the June 23 
bilateral talks -- means the next time a problem case arises, 
we will simply be back in the mode of talking past each 
other, with little positive effect. 
 
Alenia Spazio -- China and Cosmo Skymed 
--------------------------------------- 
 
6. (S) Alenia Spazio (AS) CEO Maurizio Tucci and 
Director General Carlo Penazzi told emboffs May 13 (ref A) 
that contacts between the company and Chinese space officials 
over the last six months had revealed several potential areas 
of further cooperation. Tucci also passed to Ecmin a "company 
confidential memo" providing information on Alenia Spazio's 
 
SIPDIS 
activity with the Chinese Academy for Space Technology (CAST) 
and the Shanghai Academy for Space Technology (SAST). The 
document focuses on the company's interest in the technical 
and operational aspects of potential cooperation in the 
following three areas: 
-- Telecommunications, including on-board telecommunication 
equipment; 
-- Manned infrastructure, including in the areas of shielding 
from micrometeoroids and debris; design and welding 
procedures for pressurized structures; and thermal controls 
for modules; and 
-- Scientific satellites and moon exploration, particularly 
with regard to satellites studying the effect of solar 
activity on the earth's atmosphere. 
 
AS continues to look to China as an important element in 
reinvigorating the company's operations, though it appears in 
the near term that there may be fewer commercial prospects 
there for AS than was the case last summer. We expect to hear 
further details on AS discussions with China at the June 23 
discussions. 
 
7. (S) During bilateral discussions last year (ref D), the 
GOI expressed strong interest in pursuing a USG-GOI agreement 
on remote sensing projects, such as the Cosmo Skymed project 
led by Alenia Spazio. Since then, however, the GOI has not 
given us any indication of whether such interest remains. 
Given Alenia Spazio's lead role in the Cosmo Skymed project, 
we suspect the GOI may use the talks to once again push for 
at least the initial steps (such as a meeting of technical 
experts) towards reaching a potential agreement. 
 
Other Issues 
------------ 
 
8. (S) We understand Washington is interested in raising the 
Joint Strike Fighter program, as well as the EU China arms 
embargo, during the June 23 discussion. Tripepi has told us 
that the interagency dual-use committee that he chairs is not 
a relevant player in either of these two areas. The expected 
composition of the GOI delegation thus may inhibit any 
 
 
in-depth discussion of either topic. 
 
Visit Rome's Classified Website: 
http://www.state.sgov.gov/p/eur/rome/index.cf m 
 
SEMBLER 
 
 
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 2004ROME02322 - Classification: SECRET