US embassy cable - 05VILNIUS530

C O N F I D E N T I A L VILNIUS 000530 
 
SIPDIS 
 
STATE PASS TO EUR/NB AND EUR/PRA (MCASSAYRE) 
 
E.O. 12958: DECL: 05/22/2015 
TAGS: MCAP, KSTC, PARM, PGOV, PTER, PINR, LH, NP, HT18 
SUBJECT: LITHUANIA'S MFA WARY OF PROPOSED ARMS SALE TO NEPAL 
 
REF: G. SHELTON E-MAIL FROM EMBASSY KATHMANDU 5/23/05 
 
Classified By: Political/Economic Officer Alexander Titolo for reasons 
1.4 (b) and (d) 
 
1.  This is a short-fuse action request; see para 6.  We need 
input from Washington and Katmandu by OOB May 24. 
 
2.  (C) SUMMARY: Kestutis Jankauskas, Director of the MFA'a 
Security Policy Department, notified us on May 18 of an 
application of a Lithuanian company for a license to export 
ammunition-manufacturing equipment to the Government of 
Nepal.  Jankauskas said the GOL was consulting with us under 
the terms of the confidential bilateral agreement our 
governments concluded via an exchange of notes in April of 
this year, preliminary to Lithuania's membership in the 
Wassenaar Arrangement.  Jankauskas said that the MFA has 
suspicions that the equipment may be diverted to other 
recipients, possibly including terrorists, and general 
reservations about providing an export license for the sale 
of such equipment to Nepal.  He bases his suspicions on the 
high value of the sale of ostensible "replacements," and his 
reservations on the internal civil strife and concern for the 
human rights situation in Nepal.  Jankauskas suggested that 
defense firms may be looking to export arms or related 
material from Lithuania because they 
believe it will be easier to gain export licenses from the 
GOL than from Western European governments.  He noted that 
the governments of France and Germany have previously denied 
export licenses to Nepal for category ML18 items. 
 
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DETAILS OF THE PROPOSED SALE 
---------------------------- 
 
3.  (C) JSC Manubaltas, a Lithuanian firm the MFA maintains 
is a wholly-owned subsidiary of the French company Manurhin 
Equipment S.A., proposes to export ammunition-manufacturing 
equipment, which the MFA believes falls into category ML18 of 
the national common military list.  (Post was not able to 
confirm the link between Manubaltas and Manurhin.  Manubaltas 
has no active telephone number or website.  Its address is 
listed as Zirmunu street 68, Vilnius.  Jankauskas said the 
company has "stock" valued at about USD 6,000.)  Jankauskas 
estimated the value of the contract at EUR15 million. 
 
4.  (C) The official buyer of the equipment is the Ministry 
of Defense of Nepal; the official end-user the Sundarijal 
Defense Factory.  The Directorate of Defense Production, 
Royal Nepalese Army, Sundarijal Defense Factory, 
Sundarijal-Kathmandu Nepal sealed the end-user certificate 
under the signature of Brigadier General S. D. Shah, Director 
of Defense Production of the Royal Nepalese Army, January 14, 
2005.  The Nepalese Charge d'Affaires in Moscow (name 
illegible) authenticated the seal and signature on March 21. 
 
5.  (C) The GOL's interagency export control board will 
review the license request on May 24.  Because of the high 
value of the sale, Jankauskas expects significant interest on 
the part of some board members to approve the license 
application, and he wants to be able to make a strong, 
informed argument on the merits -- for or against.  He 
requested that the USG provide any information available on 
the following issues by May 24 to assist the board's decision 
making process: 
 
--  bona fides of Sundarijal Military Factory, 
 
--  possibility of diversion in transit, 
 
--  verification of the Ministry of Defense's need for the 
equipment, and 
 
--  record of Manurhin Equipment S.A. supplying products to 
unstable states. 
 
6.  (C) COMMENT AND ACTION REQUEST: This request demonstrates 
Lithuania's serious commitment to non-proliferation and 
recognition of the importance of our bilateral cooperation. 
We request Department and other addressees provide any 
information releasable to the GOL that will complement their 
efforts.  We appreciate Embassy Kathmandu's quick response 
and input (ref e-mail) on the issues of Sundarijal's bona 
fides, possibility of diversion in transit, and the Defense 
Ministry's need for this equipment.  We call attention to the 
short fuse to respond to the MFA before the May 24 meeting. 
Kelly