US embassy cable - 05ROME1591

S E C R E T  ROME 001591 
 
SIPDIS 
 
 
STATE FOR EUR/WE, EUR/PRA, INR/SPM, NP/ECNP 
 
E.O. 12958: DECL: 05/09/2015 
TAGS: ETTC, PARM, IT, IR, EXPORT CONTROLS 
SUBJECT: IRANIAN FAST BOATS 
 
REF: A. SECSTATE 56208 
 
     B. 04 ROME 2964 AND PREVIOUS 
 
Classified By: Economic Minister-Counselor Scott Kilner for Reasons 1.4 
 (b), (c), and (d) 
 
1.  (S) Summary. In response to Ref. A demarche, Italy's 
Export Control Coordinator Carol Tripepi assured us that the 
GOI will continue to block the export of FB Design's last 
fast boat under its contract with Iran, and that he was 
unaware of any ongoing business between the company and 
Iranian entities.  Tripepi also stated that the GOI had 
recently turned down a license request by Isotta Fraschini 
for the export of non-magnetic engines to Iran.  More 
problematically, Tripepi greeted with skepticism our concerns 
over indigenous Iranian fast boat production capabilities; he 
would not agree to discuss the matter with FB Design and 
suggested that further details be passed through intelligence 
channels.  Finally, Tripepi insisted that further discussion 
of broadening controls (including more flexible Italian 
controls) on fast boats and other potential dual-use items 
should be conducted in multilateral fora. Embassy will also 
be discussing our demarche with the Ministry of Productive 
Activities and the Ministry of Defense, and will report their 
reactions. End summary. 
 
2. (SBU) Ecmin and econoff discussed Ref. A demarche for one 
hour on May 4 with Carlo Tripepi, MFA Non-Proliferation 
Coordinator (as well as Director of the MFA,s Arms Material 
Authorization Unit, which licenses Italian munitions 
exports). Tripepi was accompanied by Carlo Formosa, Office of 
the Director General for the Middle East and the 
Mediterranean; Bruno Campria, Office of Persian Gulf Affairs; 
and Carmelo Barbarello, Non-Proliferation Coordinator's 
Office. 
 
3.  (S) In presenting the demarche, Ecmin noted our continued 
appreciation for Italy's blocking of FB Design's last fast 
boat under its contract with Iran. He expressed strong U.S. 
concern, however, that Iran's Joolaee Marine Industries (JMI) 
was now serial-producing hulls for such boats in Iran using 
the prototypes supplied earlier by FB Design. Ecmin further 
stressed our concern about any technical assistance that FB 
Design or the engine manufacturer Isotta Fraschini might be 
providing Iran.  The U.S. continued to urge Italy to find the 
means to permanently implement more flexible controls for 
sensitive exports to Iran that did not clearly fall under a 
multilateral regime, as other European countries have managed 
to do. We also delivered the additional paper detailing 
fifteen incidents last fall involving Iran's threatening use 
of patrol boats in the Persian Gulf, presenting it as an 
illustration of Iran's continued provocative behavior. 
 
4. (S) In responding, Tripepi first reconfirmed that the GOI 
would continue to prevent delivery of the final FB Design 
patrol boat to Iran. He also said that he had no evidence of 
continuing FB Design business involvement with Iranian 
entities. However, Tripepi forcefully reiterated assertions, 
which he has made to us in the past, that flexible controls 
on exports like patrol boats need to be addressed in a 
multilateral context. Such a discussion had begun within the 
Wassenaar Arrangement, he said, and that is where it should 
remain. 
 
5.  (S) The fundamental problem, Tripepi continued, was that 
fast boats were readily available in many other countries 
that did not impose any form of export controls. Even FB 
Design boats theoretically could be shipped today to a third 
country, and then onward to Iran, with the GOI unaware of 
such transshipment and thus unable to prevent the export. 
Tripepi flatly rejected our contention that several European 
countries had successfully controlled the export of items 
like patrol boats. All EU members applied essentially the 
same export control regime, with the partial exception of the 
U.K., he stated. 
 
6. (S) Tripepi said he was unaware of any licensing 
arrangements that would legally permit Iranian domestic 
production of boats based on FB Design prototypes, although 
he could not guarantee that a license had not been granted. 
When pressed, he resisted the suggestion of approaching FB 
Design regarding any past transfers of technology because 
such transfers a) would have been legal at the time and b) 
could not now be reversed in any case.  Asked whether FB 
Design (and the GOI) would not be concerned if Iranian 
companies had "pirated" advanced fast boat designs, Tripepi 
 
countered that this would be a commercial dispute, which the 
company should pursue through international dispute 
resolution mechanisms. 
 
7.  (S) Tripepi also questioned the specificity of our 
information regarding Iranian domestic production.  While 
conceding that Iran may well be producing "generic" fast 
boats, he asked how the U.S. "really knew" the boats were 
being produced according to advanced FB Design 
specifications. Tripepi was skeptical that, even with FB 
Design prototypes, Iran would be able to manufacture patrol 
boats of the same quality as those produced in Italy, 
especially given Iran's lack of easy access to the advanced 
construction materials used to fabricate such boats in Italy. 
Tripepi suggested that exchange of more detailed information 
through intelligence channels would enable the GOI to better 
evaluate whether there would be any value in another approach 
to FB Design. 
 
8. (S) In response to Ecmin,s query on whether Isotta 
Fraschini was supplying engines or services to Iran, Tripepi 
noted that the GOI had denied a license for the firm to 
export eight "amagnetic" (presumably meaning non-magnetic) 
engines to Iran.  Such engines, he added, had military 
characteristics that required a munitions, rather than a 
dual-use, license.  Tripepi claimed not to know whether 
Isotta Fraschini was still in contact with Iran regarding 
ongoing or future commercial transactions. 
 
9.  (S)  Comment:  We interpret Tripepi's argumentation as an 
effort to draw some clear lines with respect to what the 
Italian government (or at least the MFA) will, and will not, 
do regarding future cooperation on fast boats and related 
U.S. systemic concerns over Italy's export control regime. 
The GOI will:  1) continue to hold the line on blocking the 
last delivery of the last FB Design boat;  2)  continue to 
carefully scrutinize license applications to Iranian 
end-users, blocking those items which are on multilateral 
control lists (like the non-magnetic engines);  3)  discuss 
broadening dual-use controls in multilateral fora.  What the 
GOI will strongly resist is: 1) requests for unilateral 
changes to Italian export control laws and practices, outside 
of a multilateral framework;  2)  requests to block Italian 
export, even to states of concern, of items that are not 
subject to multilateral controls;  3) requests to investigate 
Italian companies absent strong evidence of a violation of 
agreed multilateral export control regulations. 
 
10. (S)  Comment (cont.):  While perhaps presented more 
forcefully on this occasion, Tripepi's positions are 
consistent with MFA views throughout the course of our 
long-running disputes with Italy over fast boats.  What 
progress we have made on the issue (blocking the last of 12 
boats), was accomplished on the initiative of the Ministry of 
Productive Activities (to which we will next present our 
demarche) without apparent assistance from the Foreign 
Ministry. End Comment. 
 
SEMBLER 
 
 
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 2005ROME01591 - Classification: SECRET